Data suggests 8% drop in cement sales in April

Analysts, however, maintain optimism for the sector going ahead.

KARACHI: Latest provisional cement sales numbers suggest that local cement off-take in April shrunk 8% and exports shrunk 4% on a sequential basis, resulting in a 7% month-on-month (MoM) drop in total sales to 3.1 million tons, according to a research report from Foundation Securities on Friday.

For the first ten months of the fiscal year 2012-13, total sales clocked in at 24 million tons, down 11% compared to the corresponding period of last year.

Among hand-picked cement companies, Lucky Cement saw its sales drop 6% MoM, Attock Cement saw sales slip 15% MoM, whereas Fauji Cement outperformed the industry on relative grounds by focusing more on domestic market.

Foundation Securities sees improved outlook for cement players ahead, driven by expected growth in volumes and price-led margin growth.

The analysts also expect local consumption to increase in the coming months as traditionally the fourth quarter is observed to be the largest contributor in total annual cement dispatches, therefore the sector is likely to follow the same pattern in FY13, the report said.

According to a research report by JS Global Capital based on a sample of ten cement producers making up 82% of the sector’s market capitalisation, the cement sector recorded average profit growth of 125% in the nine months of fiscal year 2012-13 on back of higher margins.

Published in The Express Tribune, May 11^th, 2013.

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