UltraTech Q4 net up 19%; sees margin pressure

UltraTech Cement, India's largest cement company, on Monday warned high input and energy costs would squeeze margins going forward, after posting a 19 percent rise in its fiscal fourth-quarter profit.

UltraTech, with a capacity of 52 million tonnes a year, reported net profit of Rs 8.67 billion for the March quarter, beating estimates on higher volumes. Net sales rose 18.8 per cent over the same period to Rs 53.37 billion.

Analysts had forecast net profit of Rs 6.8 billion on net sales of Rs 52.7 billion, Thomson Reuters StarMine data showed.

Demand for cement in India, the world's largest producer after China, is expected to rise 7-8 per cent this year as lower interest rates help kickstart construction activity, analysts said, but rising costs would force companies to increase prices to protect margins.

Cement makers are also under pressure ahead of a ruling from the Competition Commission of India (CCI), an anti-trust body, expected this month, on whether companies have colluded to push prices higher.

While no companies have been named as yet, any positive findings could mean penalties for the companies.

"The cement industry is likely to grow over 8 per cent linked to the government's focus on infrastructure development," UltraTech said in a statement.

Part of the diversified Aditya Birla Group, UltraTech competes with Holcim -controlled ACC and Ambuja Cement as well as Jaiprakash Associates in the Indian market.

Shares in the company closed 0.3 per cent higher at Rs 1,466.75 in a Mumbai market that shed 1.6 per cent. The stock has risen 26 per cent so far in 2012, outperforming a 10.6 per cent increase in the main index.

Copyright @Thomson Reuters 2012