Pakistan closes FY14-15 with 3.5% sales rise

Pakistan cement sales increased by 3.5 per cent in FY14-15 as strong domestic construction and housing activity boosted dispatches, according to Topline Securities.

Total sales during the year amounted to 35.4Mta, the Express Tribune reported yesterday.  The rise is attributed to an "increase in the private sector expenditure on construction and housing," the newspaper quoted Topline Securities analyst Nabeel Khursheed as saying. Higher government infrastructure spending and improved security situation also helped increase cement sales during the year, according to Mr Khursheed.
 
Domestic dispatches rose eight per cent YoY to 28.3Mt – better than the average growth rate of five per cent seen in the last five years, he highlighted. On MoM basis, total sales grew by nine per cent to 3.3Mt in June 2015, the final month of fiscal 2014-15.
 
Export declines to ease?
However, exports were down 12 per cent YoY basis to to 7.2Mt. "This decline was attributed to decline in exports to Afghanistan, owing to competition from low price Iranian cement and political instability in the country," Mr Khursheed noted. Going forward, Topline anticipates that demand from Afghanistan is likely to improve due to the ease in the political situation.
 
Further improvements expected
The research house expects domestic cement demand in FY16 to improve further on the back of higher public development spending (PKR1.5trn for FY16, up by 27 per cent), the initiation of projects related to the Pak-China Economic Corridor, a favourable macroeconomic environment (with average GDP growth of 5.5 per cent expected in the next three years), plus and lower interest rates which are at a multi-decade low of seven per cent, Mr Khursheed said.
 
Additionally, higher disposable income due to lower inflation (4.6 per cent in FY15), will also boost private sector expenditure on construction and housing, as evidenced from mega housing schemes launched by Bahria, Fazaia, DHA and the UAE's Emaar.
 
"Based on the above reasons, we anticipate Pakistan cement sales to rise by nine per cent in FY16 to reach 38.6Mt, while we expect export sales to remain flat at 7.2Mt."