Aug. 23 (Bloomberg) -- Holcim Ltd., the world's second- biggest cement maker, increased profit more than analysts estimated on expansion in China and India and may acquire a controlling stake in Ambuja Cements Ltd. of India.

Second-quarter net income more than tripled to 2.07 billion Swiss francs ($1.72 billion), boosted by a 1.1 billion- franc gain from the sale of a stake in its South African unit, the Jona, Switzerland-based company said in a statement today. Sales rose 16 percent to 7.27 billion francs.

Holcim plans to offer as much as $1.34 billion to gain a majority of Mumbai-based Ambuja, the fourth-biggest cement maker in India, where plants are running at full capacity as the economy grows at its quickest pace in almost 20 years. Second- quarter sales climbed 34 percent in Asia and fell 0.8 percent in North America, where a U.S. housing slump crimped demand.

``The company is well positioned in emerging markets and it is doing the right thing in investing the proceeds from the disposal in the expanding Indian market,'' said Martin Huesler, an analyst at Zuercher Kantonalbank with an ``outperform'' rating on the stock.

Holcim rose as much as 3.7 percent to 126.2 francs and closed at 122.7 francs. The stock has gained 11 percent this year, giving a market value of 32.6 billion francs.

Profit excluding the South African disposal and a special dividend, was 807 million francs, according to Holcim spokesman Roland Walker. That beats the 736 million-franc median estimate of eight analysts.

India Expansion

Holcim, which already owns 32.3 percent of Ambuja Cements, plans to buy a 3.9 percent stake from the founding families for about $220 million and will make an offer to acquire another 20 percent for as much as $1.12 billion, it said today. Under Indian takeover regulations, the Swiss company must make an offer for the additional stake after buying more than 5 percent of Ambuja this year.

The Swiss cement maker will decide whether to increase its Ambuja stake further after the currently planned purchases are completed, Chief Executive Officer Markus Akermann said on a conference call.

India plans to spend $475 billion in the next five years building roads, ports and airports, helping lift annual economic growth to 10 percent by 2012 from about 9 percent last year according to Prime Minister Manmohan Singh.

`Huge Backlog'

``The very dynamic volume growth in India will continue as there is a huge backlog in housing and infrastructure,'' Akermann said.

Holcim now gets almost half of its revenue from emerging markets. Chinese affiliate Huaxin Cement Co. earlier this month reported first-half profit doubled on an increase in construction projects. Holcim holds 26 percent of Huaxin and is seeking to boost the stake further, Akermann said.

The company expects to exceed its long-term growth target of 5 percent in internal operating earnings before interest, taxes, depreciation and amortization.

Holcim's major rivals are also pursuing a strategy of worldwide expansion. Second-quarter profit at Lafarge, based in Paris, gained 17 percent as the company raised prices and added factories in China, Poland and Russia. Profit at Cemex SAB gained 6 percent. By the end of last year, the six largest cement companies controlled 30 percent of the global market, said analyst Michael Betts at JPMorgan Chase & Co. in London.

U.S. Decline

Spending on U.S. construction projects unexpectedly fell in June as cutbacks in residential construction surpassed gains in spending on hotels and office buildings, according to the Commerce Department in Washington.

Cemex became the U.S. leader with a market share of about 15 percent after its $14.2 billion acquisition of Rinker Group Ltd. That compares with about 13 percent for Holcim and Lafarge, according to JPMorgan.

Cement consumption in the U.S. will probably decline by 5 to 6 percent this year, said Holcim spokesman Roland Walker.

Holcim's acquisition program has also targeted the North American market. Earlier this month, the company bought the remainder of the shares it didn't own of Canada's St. Lawrence Cement Group Inc. for almost C$700 million ($660 million).

In Canada, Lafarge is market leader with around 34 percent and Holcim follows with about half that share.

The Swiss company has expanded in 20 markets since 1989, investing more than 19 billion francs on acquisitions and factory upgrades. Holcim sells cement and aggregates as well as ready-mix concrete and asphalt. The company works in more than 70 countries and employs almost 90,000 people.

Akermann said Holcim would be interested in some assets of Tarmac, the asphalt unit that Anglo American Plc plans to sell.

To contact the reporter on this story: Antonio Ligi in Zurich at aligi@bloomberg.net.

Last Updated: August 23, 2007 11:57 EDT