The listed cement sector of Pakistan has begun posting exponential growth figures after facing a relatively prolonged slump on account of economic slowdown coupled with the Covid-19 health crisis.
Lucky Cement reported consolidated after-tax profit of Rs5.13 billion, up 236% in the first quarter ended September 2020 as opposed to a profit of Rs1.53 billion in the same quarter of previous year.
According to a notice sent by the company to the Pakistan Stock Exchange on Monday, earnings per share during the Jul-Sept 2020 quarter came in at Rs13.45 against Rs3.93 in the same quarter of previous year.
“Earnings of the company are much higher than our expectations, by Rs10 per share,” said Topline Securities’ Deputy Head of Research Shankar Talreja. The earnings stemmed from higher-than-expected gross margins in Pakistan’s cement business, which stood at 28%, he said.
The company also invested in automobile business where it earned gross margins of 12%, said Talreja. “We estimate net sales from the automobile business to have come in at Rs16 billion, up 77% quarter-on-quarter,” the analyst said.
Similarly, Kohat Cement Company’s profit jumped 475% in the first quarter of current fiscal year 2020-21 compared to the same period of last year. The company reported profit of Rs507.1 million against Rs88.2 million in the same quarter of last year. EPS of the company amounted to Rs2.52 during the quarter against Rs0.44 in the corresponding quarter of last year.
After posting a loss for four consecutive quarters, Maple Leaf Cement reported a profit of Rs555 million last week for the quarter ended September 30, 2020 (EPS Rs0.51).
Pakistan’s cement sales, local and international, registered a growth of 52% quarter-on-quarter, driven by 35% higher volumes and soaring retention prices, said Talreja. The growth came on the back of a jump in total dispatches, said Taurus Securities analyst Asjad Hussain.
According to him, the increase in cement revenues came due to higher retail prices in the northern region and higher retention prices because of reduction in federal excise duty.
Published in The Express Tribune, October 27th, 2020.
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