Corporate results: Lucky Cement reports record profit
Manufacturer plans to expand business ventures locally and globally.
KARACHI:
Lucky Cement profits solidified at a record high Rs6.8 billion in fiscal 2012 on the back of higher local sales and better prices for the cement.
The robust surge in profitability is primarily attributable to sharp uptick of 19% in local prices, lower coal prices plus valuable cost savings from energy efficiency measures and 7% increase in domestic sales, said BMA Capital Analyst Affan Ismail.
Sales increased by 28.1% to Rs33.3 billion owing to 3% higher dispatches coupled with 25% jump in prices. Gross margins of the manufacturer augmented by 470 basis points to 38.2% compared with last year’s 33.5%.
The result announcement was accompanied by a cash dividend of Rs6 per ordinary share of Rs10.
“Cement demand in the country is at its peak, I am hopeful that this will continue to grow and increase the business for the industry,” Lucky Cement Chief Executive Officer Muhammad Ali Tabba told The Express Tribune. The industry recorded sales of 23.95 million tons in financial year 2012, 3% increase over the preceding period.
Lucky Cement’s domestic sales increased 7% to 3.7 million tons while export sales eased 4% to 2.3 million tons.
The market share of cement export to Afghanistan has considerably increased and is expected to continue, the company said in a post-result statement.
Moreover, there still exists cement export prospects to regional countries Sri Lanka and Iraq along with African country by sea routes.
Strong margins to carry the earnings momentum
Lucky Cement Chief Operating Officer Noman Hasan believes the company will continue to perform better in upcoming months.
Strong pricing scenario, sale of surplus electricity to Hyderabad Electric Supply Company (Hesco) and Peshawar Electric Supply Company and robust cash generation capacity amid lowest debt in the sector will continue to remain the major value drivers for the company.
“This is election year and I think government has enough funds to increase public sector development programme (PSDP) this year,” he said.
Expansion plans
Lucky Cement led-group bought a 75.8% stake in ICI Pakistan from the Dutch paints giant AkzoNobel for Rs14.4 billion ($152.5 million) in the period under review.
In the first statement since the take over, Lucky Cement Chairman Muhammad Yunus Tabba stated the acquisition as a strategy to diversify its business into four well establish segments of soda ash, polyester fibre, life science and chemicals.
ICI Pakistan has a successful track record and strong corporate brand equity supported dynamic management which provide a sold platform for robust future growth, added Tabba in the post-result statement.
The company’s alternate fuel replacement plant that uses tyre derived fuel and residue derived fuel successfully started operations during the year, adds the notice. The alternate fuels decreased demand of the more costly coal by 20%.
The plant would eventually utilise shredded tires as a replacement of coal for cement production.
The plants costing Rs1 billion is located at the cement production facility in Karachi and is capable of producing cheaper cement along with reducing significant carbon emissions in the environment.
Furthermore, the work on installation of grid station and 22km interconnection line with distribution network of Hesco was completed. The company is expected to start supplying 15 MW to 20MW to the electricity distributor between July and September 2012.
The company is also plans to set up a one million ton manufacturing plant in Congo under a joint venture project. Lucky Cement will contribute $40 million towards 50% share of its equity in the project. Total cost is estimated at $175 million of which 46% which will be contributed by both partners while the rest will be raised from financial institutions.
Published in The Express Tribune, August 16th, 2012.
Lucky Cement profits solidified at a record high Rs6.8 billion in fiscal 2012 on the back of higher local sales and better prices for the cement.
The robust surge in profitability is primarily attributable to sharp uptick of 19% in local prices, lower coal prices plus valuable cost savings from energy efficiency measures and 7% increase in domestic sales, said BMA Capital Analyst Affan Ismail.
Sales increased by 28.1% to Rs33.3 billion owing to 3% higher dispatches coupled with 25% jump in prices. Gross margins of the manufacturer augmented by 470 basis points to 38.2% compared with last year’s 33.5%.
The result announcement was accompanied by a cash dividend of Rs6 per ordinary share of Rs10.
“Cement demand in the country is at its peak, I am hopeful that this will continue to grow and increase the business for the industry,” Lucky Cement Chief Executive Officer Muhammad Ali Tabba told The Express Tribune. The industry recorded sales of 23.95 million tons in financial year 2012, 3% increase over the preceding period.
Lucky Cement’s domestic sales increased 7% to 3.7 million tons while export sales eased 4% to 2.3 million tons.
The market share of cement export to Afghanistan has considerably increased and is expected to continue, the company said in a post-result statement.
Moreover, there still exists cement export prospects to regional countries Sri Lanka and Iraq along with African country by sea routes.
Strong margins to carry the earnings momentum
Lucky Cement Chief Operating Officer Noman Hasan believes the company will continue to perform better in upcoming months.
Strong pricing scenario, sale of surplus electricity to Hyderabad Electric Supply Company (Hesco) and Peshawar Electric Supply Company and robust cash generation capacity amid lowest debt in the sector will continue to remain the major value drivers for the company.
“This is election year and I think government has enough funds to increase public sector development programme (PSDP) this year,” he said.
Expansion plans
Lucky Cement led-group bought a 75.8% stake in ICI Pakistan from the Dutch paints giant AkzoNobel for Rs14.4 billion ($152.5 million) in the period under review.
In the first statement since the take over, Lucky Cement Chairman Muhammad Yunus Tabba stated the acquisition as a strategy to diversify its business into four well establish segments of soda ash, polyester fibre, life science and chemicals.
ICI Pakistan has a successful track record and strong corporate brand equity supported dynamic management which provide a sold platform for robust future growth, added Tabba in the post-result statement.
The company’s alternate fuel replacement plant that uses tyre derived fuel and residue derived fuel successfully started operations during the year, adds the notice. The alternate fuels decreased demand of the more costly coal by 20%.
The plant would eventually utilise shredded tires as a replacement of coal for cement production.
The plants costing Rs1 billion is located at the cement production facility in Karachi and is capable of producing cheaper cement along with reducing significant carbon emissions in the environment.
Furthermore, the work on installation of grid station and 22km interconnection line with distribution network of Hesco was completed. The company is expected to start supplying 15 MW to 20MW to the electricity distributor between July and September 2012.
The company is also plans to set up a one million ton manufacturing plant in Congo under a joint venture project. Lucky Cement will contribute $40 million towards 50% share of its equity in the project. Total cost is estimated at $175 million of which 46% which will be contributed by both partners while the rest will be raised from financial institutions.
Published in The Express Tribune, August 16th, 2012.