PHOTO: FILE
A subsidiary of Pharaon Group - a group of companies with investments in cement, oil and gas, power generation and information technology sectors - the company earned an after-tax profit of Rs2.21 billion or Rs19.26 per share in FY2015, up 9.5% compared to Rs2 billion or Rs17.59 per share of the last fiscal year.
One of the key highlights of the result includes a 4.3% year-on-year increase in revenues, which clocked in at Rs13 billion during the review period compared to Rs12.5 billion, AKD Research said in its report.
The company’s gross margins, which improved by 407 basis points to 33.6% in FY15, also contributed to the net earnings, the report said.
Amid profit taking, Attock Cement’s share price declined 0.4% as 277,500 shares, its highest volume for the month, changed hands during the last trading session of the week. Opening at Rs200.01 per share, the stock reached a low of Rs196 per share intra-day and traded at Rs199.16 per share at the close of business on Thursday.
The results were accompanied with an announcement of the company’s expansion plans. In a notice sent to the Karachi Stock Exchange (KSE) on Thursday, Attock Cement announced the expansion of its production capacity by installing a $120 million cement plant at the existing facility in Hub, Balochistan.
“The lead time from the financial close to the commencement of operations is expected to be around 30 to 36 months where the company will likely rollout its first production batch in the third quarter of FY19,” AKD Research report said.
Attock Cement is the third cement manufacturer to announce an expansion after DG Khan Cement and Cherat Cement in the backdrop of more grounded positivity regarding materialisation of projects earmarked under the China Pakistan Economic Corridor (CPEC), the report said, adding more expansions could not be ruled out in the sector.
However, the announcement by Attock Cement resulted in cement stocks, such as DG Khan, Fauji Cement and Maple Leaf Cement to decline by 0.98% to 1.39%, according to a report by Topline Securities.
Explaining the cement sector’s reaction to the expansion plans of Attock Cement, AKD’s report said the sector reacted sharply to the news with investors ostensibly fearing outbreak of a price war.
“That said, with higher Public Sector Development Programme (PSDP) allocation and (CPEC) projects to kick in along with expected three-year lead time, fears of an immediate price war appear overblown,” the report said, adding that with local cement dispatches up eight percent in FY15, cement players are likely to concentrate on further strengthening margins rather than under-cutting each other.
Published in The Express Tribune, August 14th, 2015.
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