UltraTech Cement Ltd, India's largest cementmaker, reported a profit miss in the September quarter due to rising fuel and freight costs linked to the ongoing West Asia crisis, according to livemint.com. The company highlighted surging petcoke and industrial diesel prices as key factors increasing production expenses, despite strong cement demand and expectations of higher prices to support margins.
During a post-earnings interaction, UltraTech's chief financial officer Atul Daga described the situation as highly unpredictable, stating that forecasting the impact of the West Asia conflict was more difficult than "predicting a roll of a dice." He noted that petcoke prices had "shot through the roof" and diesel prices were at an "all-time high" following continuous government increases, which elevated mining and transport costs for the company.
The cement sector is facing prolonged input cost pressures, with UltraTech's experience signaling challenges for smaller rivals who may struggle to absorb these increases. The rise in fuel prices, especially petcoke and industrial diesel, has added to the volatility in production costs, complicating profitability despite robust sales. This cost environment underscores the broader impact of geopolitical tensions on India's industrial sectors.
UltraTech's outlook remains cautious as the West Asia conflict continues without signs of de-escalation, prolonging cost uncertainties. The company expects higher cement prices and strong demand to support margins in the future, but the duration of cost pressures will depend on developments in the region, Atul Daga said during the earnings call.