Corporate results: Lafarge Cement profit drops 86% as cost rises

In nine months, however, company performs better.

KARACHI: Lafarge Pakistan Cement, the only multinational cement manufacturer in Pakistan, announced disappointing results on Wednesday.

The company posted after-tax profit of just Rs39 million in the third quarter ended September 2013, down a massive 86% from Rs269 million in the same period of previous year. Earnings per share dropped to Rs0.03 from Rs0.20 last year.

However, on a nine-month basis, the company performed better compared to the previous year. It earned Rs903 million in the first nine months of 2013 compared to Rs768 million in the same period of 2012.

“The third-quarter results of Lafarge Pakistan Cement were unsatisfactory for more than one reasons,” Summit Capital analyst Sarfaraz Abbasi said.

One of the foremost things that one could notice was that the company’s administrative cost had gone much higher than its distribution cost, which reflected bad on the management, Abbasi said, adding this also meant that its sales might remain weak in the near future.

Secondly, financial cost increased in the third quarter compared to previous quarters. “This is not good for Lafarge Cement, as this has happened at a time when other cement companies are performing well and getting rid of their previous debts,” he added.

Lafarge Pakistan Cement is part of Lafarge, a French company specialising in the manufacture of construction materials.

The company’s plant has an annual production capacity of 2.5 million tons or 5.5% of the total installed capacity of the cement industry in Pakistan. Its plant is located at Kalar Kahar, Chakwal district of Punjab, an area considered rich in limestone reserves.

So far, the year 2013 has seen a continuation of high retention prices that has helped the cement industry improve margins considerably.

Published in The Express Tribune, October 24^th, 2013.

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