corporate result: Maple Leaf Cement's profit declines 19% to Rs1.17b

Earnings per share decrease to Rs2.12 in Oct-Dec period

Our Correspondent February 17, 2018
"Despite robust growth in local dispatches that we have seen so far, the company's consolidated net sales remained almost flat", stated Topline analyst PHOTO:FILE

KARACHI: Maple Leaf Cement posted a consolidated profit of Rs1.17 billion in the quarter ended December 31, 2017, down 19% from Rs1.44 billion in the same period of last year, according to a company notice sent to the Pakistan Stock Exchange (PSX).

Earnings per share (EPS) decreased to Rs2.12 compared with an EPS of Rs2.73 in the period under review.

This takes the six-month (Jul-Dec) profit to Rs2.25 billion (EPS of Rs4.12), down 14% compared with Rs2.62 billion (EPS of Rs4.97).

Cement industry capacity utilisation touches 99%

According to a Topline Securities report, the result was in-line with market expectations.

Maple Leaf Cement's share price decreased 2.6% to end at Rs69.76, down 2.6% on a day the KSE-100 index climbed to 43,627, up 685 points or 1.59%.

"Despite robust growth in local dispatches that we have seen so far, the company's consolidated net sales remained almost flat year-on-year in the second quarter of fiscal year 2018 primarily on the back of lower local net retention prices (grey cement)," stated Topline.

The report said that the initial impressions suggest that average net retention prices of the company declined by Rs20-25 per bag year on year to around Rs330-335 per bag in the second quarter of fiscal year 2018.

Consolidated gross margins significantly contracted by nine percentage points year-on-year to 35% in the outgoing quarter. However, margins from cement operations were down 13 percentage points to 31%.

Lucky Cement’s profit dips 6%

This can be attributed to a four-percentage-point difference in consolidated and unconsolidated margins to start of the 40MW coal power plant (set up by the company as a subsidiary), which is supplying electricity to Maple Cement.

The dent on cement operations margin in the second quarter of fiscal year 2018 were owing to higher freight on board coal prices, up 34% year-on-year to an average $87 per ton (with a quarter lag impact).

Stiff price competition, unanticipated increase in gas and coal prices, and lower than estimated demand are key risks for the company. 

Published in The Express Tribune, February 17th, 2018.

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