Lucky Cement’s lucky streak continues

Cement producer’s profits grow 62% in the quarter on back of higher margins.

KARACHI: Lucky Cement on Monday posted a profit of Rs2.7 billion in the third quarter of fiscal 2013 (3QFY13) with an earnings per share (EPS) of Rs8.32 compared to Rs1.67 billion in the corresponding period of last year.

The results showed a robust increase of 61% year-on-year (YoY) and 18% quarter-on-quarter (QoQ) profits.

The result was above estimations of Rs2.35 billion due to lower than expected effective tax rate at 12% versus estimates of 20%, a research note from AKD Securities said.

For the first nine months of fiscal 2013, the company reported a profit of Rs6.98 billion, registering a 49% growth. The key highlights included 2% YoY rise in total dispatches, which clocked in at 4.45 million tons. Additionally, higher domestic retention prices drove the top-line up 16% YoY to Rs27.7 billion, while higher domestic netbacks in addition to lower coal prices lifted gross margins by 631 basis points (bps) YoY to 44.2%.

“We foresee improvement in gross margins on the back of higher cement prices amidst seasonal demand uplift in the upcoming quarter and subdued coal prices,” the note added.

On a pre-tax basis, earnings were in-line with the brokerage house’s estimates with the company posting net profit before taxes (NPBT) of Rs3.065 billion against expectations of Rs2.939 billion.

The sequential growth of 18% in 3QFY13 earnings was due to 9% QoQ improvement in total dispatches that together with higher local retention prices resulted in 18% QoQ growth in top-line. Gross margins (GMs) were also up slightly by 50bps QoQ to 44.6%, adding to the earnings accretion.

Published in The Express Tribune, April 30^th, 2013.

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