Corporate result: Lucky Cement's profit falls 13%, amounts to Rs3.9b

KARACHI: Lucky Cement's profit fell 13% to Rs3.9 billion in the quarter ended March 31, 2019, according to a notice sent to the Pakistan Stock Exchange (PSX).

The company reported a profit of Rs4.5 billion in the corresponding period of previous year.

Earnings per share (EPS) of the company amounted to Rs10.71 in the Jan-Mar 2019 quarter against Rs12.43 in the same period of 2018.

"Higher cost of production and volumetric decline were the two main reasons behind the fall in profit of Lucky Cement," said BMA Capital analyst Syeda Humaira Akhtar in comments to The Express Tribune. "The volumetric drop was recorded at 7% in the quarter under review compared to the same quarter of 2018."



The company reported net sales of Rs35 billion in Jan-Mar 2019 compared with Rs33 billion last year, recording a growth of 6%.

"Due to higher cost of sales, the gross margins dropped significantly," the analyst pointed out. "In the quarter under review, the gross profit margins declined to 31% against 34% last year."

Sales volume of Lucky Cement went down when the government slashed budget for the Public Sector Development Programme (PSDP), she said.

According to her, the demand from the southern region was strong but due to robust exports the company had to bear additional costs, therefore its revenue from the south sank.

Due to a higher quantum of exports in total sales, distribution expenses increased 32% on a year-on-year basis, she added.

Cost of sales rose to Rs22 billion in the Jan-Mar 2019 quarter compared with Rs19 billion last year, showing an increase of 14.9%.

Nine-month result

During the nine months ended March 31, 2019, the company reported net profit of Rs10 billion, which was 23% lesser compared to Rs13 billion in the same period of previous fiscal year.

On a cumulative basis, the EPS amounted to Rs28.64 as opposed to Rs36.91 last year.

Sales of the company during the nine months stood at Rs103 billion, 11% higher than Rs93 billion in the corresponding period of previous fiscal year. Cost of sales increased to Rs64 billion from Rs53 billion last year.

"The company's other income is falling bit by bit. Lucky Cement is debt-free and its cash pile is decreasing gradually as its projects are in progress," said the analyst.