India's UltraTech Q2 net almost doubles, warns on costs

Sat Oct 20, 2012 2:02pm IST

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* Q2 net profit up 97 pct on low base

* Variable costs up 8 pct in qtr, freight costs weigh

MUMBAI Oct 20 (Reuters) - UltraTech Cement, India's biggest cement producer, reported a near doubling of profit in the quarter to the end of September from a low base but warned of higher costs for materials, fuel and freight.

Demand for cement in India, the world's second-largest producer after China, is expected to rise about 8 percent during the fiscal year that ends in March, driven by a government push to expedite infrastructure projects to revive growth.

Sales growth across the sector has been slow this year as a result of sluggish homebuilding and construction in Asia's third-largest economy.

Margins of cement makers have come under pressure in recent months due to an increase in the cost of fuel and transport. Ultratech's variable costs rose 8 percent in the quarter from a year previously, the company said on Saturday.

In September, the government hiked diesel prices by 14 percent and that will have a further impact on cement producers.

Major rivals Ambuja Cements and ACC Ltd warned this week that rising fuel and freight costs could nullify increased demand over the coming months.

UltraTech is among a group of cement makers fined a total of $1.1 billion in June for price fixing.

The company, part of the diversified Aditya Birla Group, said its additional capacity of 10.2 million tonnes per year at plants in Chhattisgarh and Karnataka would be operational in the early part of the fiscal year that begins in April 2013.

UltraTech reported a 97 percent rise in standalone profit to 5.5 billion rupees for the July-September quarter, falling short of market estimates of 5.89 billion rupees, according to Thomson Reuters I/B/E/S.

Net sales rose 20 percent to 47 billion rupees. (Reporting by Henry Foy; Editing by Paul Tait)

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