Corporate results: Bestway Cement’s profit hits Rs3.94 billion, up 5%

EPS clocks in at Rs6.81 during July-December 2014.

KARACHI:

Bestway Cement – the country’s largest cement maker – has posted a net profit of Rs3.94 billion during the first half (Jul-Dec) of fiscal year 2015 (FY15), up 5% compared to Rs3.75 billion in the same period of previous year.

Earnings per share (EPS) jumped to Rs6.81 from an EPS of Rs6.49 in the period under review. The second quarter (Oct-Dec) FY15 was better for the company as it earned Rs2.34 billion, up 12.5% from Rs2.08 billion in the same period of previous year.

In just over a decade, its production capacity increased more than four times and, after acquiring Lafarge Cement last year it became the largest cement maker in Pakistan.

Currently, the installed capacity of Bestway Cement is 8.3 million tons per annum – 7% more than Lucky Cement, which has now become the second largest player with an installed capacity is 7.75 million tons per annum.

Pakistan’s total installed capacity of the cement industry is 45 million tons, according to the All Pakistan Cement Manufacturers Association (APCMA).



“The result is satisfactory and in line with market expectations,” AKD Securities analyst Jawad Shamim told The Express Tribune. “Big cement companies were expected to post good results just like the small and mid-size players because of the overall strong fundamentals of the industry.

“Despite all the positive things, there is still one problem that can hit the cement industry and it is the price war among players,” said Shamim, adding that chances are remote because most managements at cement companies are looking beyond the price war.

DG Khan Cement – one of the leading cement makers in Pakistan – wants to bring in another cement unit in the southern part of the country, which is a cause of disagreement among influential players in APCMA that are concerned over market share.

Bestway Cement is part of the Bestway Group of the United Kingdom. The group has a well-diversified portfolio incorporating within its folds cement manufacturing, global banking, wholesale cash and carry business, a string of retail outlets, real estate investment, ethnic food and beverage import and distribution and milling of rice.

According to BMA Research, selected cement companies in the second quarter (Oct-Dec) of fiscal year 2015 (FY15) continued their upward momentum in earnings and produced a net profit of Rs9.3 billion compared to Rs7.1 billion in the same quarter of previous year, up 32% year on year.

The earnings growth was primarily driven by 7.2% year-on-year growth in sales revenue and 160 basis points expansion in gross margins that clocked at 38.1%.

Published in The Express Tribune, March 4^th, 2015.

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