Pakistan: Attock Cement plans 3300tpd plant
Attock Cement Ltd has planned an estimated capital outlay of US$120m to install a new plant with a clinker production capacity of 3300tpd, securities analyst Sajjad Hussain at BMA Capital said. Currently the company has a cash and short-term investment reserves of PKR3.8bn.
The location of the new plant will be next to the existing Hub Chowki plant site in Lasbella, Baluchistan, in the western province of Pakistan.
“However, the mode of financing is yet to be decided,” Mr Hussain said. “Given an average growth of seven per cent in the southern local dispatches, the company’s decision to expand will favour the earnings outlook moving forward by debottlenecking its capacity limitations.”
The company is finally going forward with the much-needed expansion as it has been operating at more than 100 per cent capacity utilisation for the past six years.
The new production line, along with other projects under pipeline, including a cement grinding unit in Basra, and 40MW coal-fired power plant, will likely add value to the existing attractive valuations of the company.
The company has produced 1.414Mt of cement in the nine months period ended 31 March 2015 against 1.399Mt in 9M July-March 2014. Though local sales are lower due to sluggish market conditions, the deficit is being managed through higher exports. Attock Cement is maintaining its established presence in Asia and Africa as well as exploring new markets to diversify its sales and maintaining its existing export levels.
Overall net sales revenue increased by PKR626m (seven per cent) over corresponding period mainly due to increase in net retention by PKR355/t (five per cent) as compared to same period last year. Falling coal and oil prices in international markets and the impact on various input costs in Pakistan has helped the company in terms of its production cost. Gross and operating margins improved significantly from 28 and 20 per cent to 32 and 24 per cent, respectively. Consequently, the company recorded net profit after tax of PKR1.644bn, up 17 per cent when compared to same period last year.
