Lucky Cement profits remain stagnant
Company shifts focus to local market.
KARACHI:
Lucky Cement’s net profit fell 3.4 per cent to Rs2.47 billion in the first nine months of fiscal 2011 on the back of lower sales.
The second largest cement-maker in the country shifted its focus to the local market from the export market during the period under review.
Hence, Lucky Cement managed to increase local sales by 12 per cent at a time when industry sales declined by eight per cent. The company’s local market share increased to 15.5 per cent from 13.8 per cent in the first nine months of fiscal 2011, according to a notice sent to the Karachi Stock Exchange on Monday.
However, export sales declined by 33 per cent to 1.78 million tons on account of reduced exports to the Middle East, disconnected road links to Afghanistan due to floods, and regulatory issues in Sri Lanka, said IGI Securities analyst Sana Abdullah.
Sales revenue increased six per cent to Rs22.5 billion against Rs21.3 billion in the same period last year due to higher cement prices.
Moreover, cost of goods sold increased by 21.11 per cent with major cost being fuel and power, which constitutes 63 per cent of total production cost.
Cost of power did increase but timely impact of the company’s waste heat recovery system helped it mitigate some of the effects of increasing input prices, added the analyst.
The company has a waste heat recovery project at the Karachi plant, which has replaced almost 23 per cent of power generation-related fuel cost.
Price of coal, a major input in cement manufacturing, increased by an unprecedented 34 per cent to average $117 per ton primarily due to severe floods in Australia and Japan crisis soon after that. However, due to adequate coal inventory levels maintained by Lucky, the impact of coal prices would be slightly lower compared to others, the analyst said.
Published in The Express Tribune, April 19th, 2011.
Lucky Cement’s net profit fell 3.4 per cent to Rs2.47 billion in the first nine months of fiscal 2011 on the back of lower sales.
The second largest cement-maker in the country shifted its focus to the local market from the export market during the period under review.
Hence, Lucky Cement managed to increase local sales by 12 per cent at a time when industry sales declined by eight per cent. The company’s local market share increased to 15.5 per cent from 13.8 per cent in the first nine months of fiscal 2011, according to a notice sent to the Karachi Stock Exchange on Monday.
However, export sales declined by 33 per cent to 1.78 million tons on account of reduced exports to the Middle East, disconnected road links to Afghanistan due to floods, and regulatory issues in Sri Lanka, said IGI Securities analyst Sana Abdullah.
Sales revenue increased six per cent to Rs22.5 billion against Rs21.3 billion in the same period last year due to higher cement prices.
Moreover, cost of goods sold increased by 21.11 per cent with major cost being fuel and power, which constitutes 63 per cent of total production cost.
Cost of power did increase but timely impact of the company’s waste heat recovery system helped it mitigate some of the effects of increasing input prices, added the analyst.
The company has a waste heat recovery project at the Karachi plant, which has replaced almost 23 per cent of power generation-related fuel cost.
Price of coal, a major input in cement manufacturing, increased by an unprecedented 34 per cent to average $117 per ton primarily due to severe floods in Australia and Japan crisis soon after that. However, due to adequate coal inventory levels maintained by Lucky, the impact of coal prices would be slightly lower compared to others, the analyst said.
Published in The Express Tribune, April 19th, 2011.