Lucky Cement profits fall to PKR3.34bn in FY20

Lucky Cement Ltd has announced dismal financial results for FY19-20 (July 2019-June 2020). The company earned an after-tax profit of PKR3.34bn (US$19.8m) as compared to PKR10.49bn, reported during the same period in the previous financial year.

The company attributed the drop in the profitability for the last three years mainly to increased capacities coming online locally, which has put downward pressure on margins, while input costs have continued to increase. However, as the local demand-supply balance improves and exports gain further momentum, margins are expected to grow.

The company's overall sales volume declined by 0.6 per cent YoY to 7.63Mt in FY19-20. The domestic cement sales volume registered a decline of 7.6 per cent to 5.41Mt in comparison to 5.85Mt in the previous financial year. However, export sales volumes improved by 18.8 per cent to 2.16Mt as compared to 1.82Mt in the previous financial year.

Iraq project
All the shipments of the new clinker plant have reached the site and erection work is in progress for the greenfield 1.2Mta clinker production facility in Samawah, Iraq. The first shipment of the cement grinding unit arrived at site during the first week of August 2020 with the second shipment of the cement grinding unit as well as two WHR boilers, a Wärtsilä generator and other critical materials for cement mill expected to reach the site in August/-September 2020. The workforce has been continuously working on the project despite the lockdown due to COVID-19.

However, as a result of the air space closure in Iraq, Lucky Cement has not been able to mobilise additional human resources to expedite the preheater/kiln, refractory work as well as electrical works. However, the company foresees only a slight delay in project completion, which Is now expected by the end of December 2020 or early January 2021. However, if the air space remains closed, the COD can be further delayed.

Lucky Cement local shares
A leading research house, Intermarket Securities Limited, positively remarked that Lucky Cement's market share had been increased to 17 per cent and the company became the largest cement manufacturer in Pakistan with a cement capacity of 12.2Mta, after its recent expansion of 2.2Mta in Pezu.