Lucky Cement has managed to increase its profit by 90% to Rs4.69 billion in the current financial year despite production levels staying at the same levels as last year.
The astounding boost was solely driven by selling prices which surged 25% to Rs425 per bag against Rs339 per bag in the same period last year, said Summit Capital analyst Sarfraz Abbasi. Lucky Cement even outpaced its fellow peers when it came to increasing prices, said another analyst who requested anonymity.
The massive increase has been beneficial for the industry, however, it has sparked a debate among builders who question the legitimacy behind the hikes. Association of Builders and Developers of Pakistan on Thursday termed the industry a cartel and decided to protest against the regular price hikes.
Volumetric sales rose marginally by 2% to 4.37 million tons against sales of 4.28 million tons.
Total interest bearing debt reduced by 42% on a quarterly basis as the company repaid debt of Rs2.7 billion on a quarterly basis.
The company also disclosed its plan to set up a cement grinding facility in Iraq in a joint venture with a local partner. The plant with production capacity of 870,000 tons will cost $30 million of which 50% will be paid by Lucky Cement. The company is already establishing a one million ton manufacturing plant in Congo under a joint venture project.
It also announced plans to buy a 13.8% equity stake in Yunus Energy Limited for $4 million. The company plans to set up 50MW wind farm in Jhimpir, Thatta.
The company also disclosed it would start supplying electricity to Hyderabad Electric Supply Company (Hesco) by May. Lucky Cement has power generation units at production facilities of Karachi and Pezu, KPK, capable of producing around 175MW electricity. Since 2010 both plants installed are contributing additional 22MW electricity converted out of wasted heat it captures and reuses to produce energy.
Published in The Express Tribune, April 27th, 2012.