Lucky Cement's domestic capacity to rise to 15.3Mta

Lucky Cement Ltd announced its financial results for the 4QFY21-22 (April-June 2022) on 5 August 2022 and held a corporate briefing session at the Pakistan Stock Exchange (PSX) to discuss the company’s outlook. 

Expansion of the Pezu cement plant in Pakistan's Khyber Pakhtunkhwa province to 3.15Mta is progressing well and is expected to cost PKR30bn (US$133.6m), according to Lucky Cement. This brownfield expansion in the north of the country is scheduled to come on-line in December 2022.Upon completion of the project, Lucky Cement's production capacity in the country will reach 15.3Mta, said the company official notification to the PSX.

Lucky Cement has also stated that it is installing a 34MW solar power project with 5.589MWh Reflex energy storage at the Pezu plant. Commercial operations are expected to begin in the 2QFY22-23.

Financial results
In terms of the company's recent financial performance, Lucky Cement Ltd posted an unconsolidated net profit after tax of PKR4.0bn for the 4QFY21-22, down 28 per cent QoQ. This takes FY21-22 net profit after tax to PKR15.3bn, up nine per cent YoY. Sales volumes declined by 8.9 per cent to reach 9.1Mt in the financial year, compared to 10Mt a year earlier.

Local sales volume dropped by 3.6 per cent to reach 7.3Mt in the year under review compared to 7.6Mt the previous year. Meanwhile export sales declined by a substantial 25 per cent to 1.8Mt (versus 2.4Mt a year earlier), due to non-viability in terms of pricing on the back of persistently-high coal prices in the international market coupled with increased shipping freights.  

Outlook
The company has reported that it expects the economic outlook in Pakistan in FY22-23 to be challenging , especially due to the high current account deficit, which stood at US$17.4bn for FY22 versus US$2.8bn for FY21. The IMF staff level agreement has now been signed, and as per government statements, most conditions have been met, and it expects the programme to resume following the approval from the IMF Board towards the end of August 2022. The resumption of the IMF programme will reduce uncertainty and open avenues for borrowing from other sources, which could help stabilise the foreign reserves and the domestic economic situation.