Maple Leaf Cement Factory Ltd (MLCF) has informed Pakistan Stock Exchange (PSX) that an additional dry process clinker production line of 7000tpd grey clinker, a brownfield expansion at the company’s existing site in Iskanderabad, Punjab, successfully started production on 3 November 2022, according to a bourse filing of Company Secretary Muhammad Ashraf.
MLCF had signed a contract with Chengdu Design & Research Institute, China, to supply a 7000tpd grey clinker line in March last year. This will lead the company to become the fourth largest player in the industry with a single site capacity of 7.7Mta. The 1QFY23 reports add the project is being financed with a mix of concessionary debt and internally generated cash flows.
A recent report by AL Habib Capital Markets has estimated the project’s cost at PKR20bn (US$90.2m), which will be financed with a debt-to-equity ratio of 70:30. For this, the company has availed Long Term Financing Facility (LTFF) and Temporary Economic Refinance Facility (TERF) of the central bank. MLCF is also working on a new waste heat recovery plant to add to Line 4. The planned project is expected to further enhance capacity from 25MW to 33MW.
Financial performance in July-September 2022-23
During 1QFY23, the company recorded a net consolidated turnover of PKR12.827bn against PKR9.896bn in the corresponding period last year. MLCF’s top line increased by 30 per cent, mainly due to improved selling prices in the local market. It was also reflected in consolidated profit, which rose to PKR1.378bn from PKR839m during this period, representing an increase of 64 per cent.
But, the total sales volume declined to 902,102t, a decrease of 20.58 per cent over the 1.135Mt sold during the corresponding period last year. Domestic sales volume of 872,039t describes a significant reduction of 20.34 per cent compared to the corresponding period last year due to floods, political instability, etc.
The company’s export volume decreased by 27.01 per cent to 30,062t from 41,189t in the corresponding period. Exports have not picked up following the American departure from Afghanistan. This has resulted in a slowing down of the economy, with banking restrictions another major reason for the decline in export sales. Cement dispatches to the rest of the world are still not feasible due to high production costs in Pakistan compared to global markets and increased shipping costs, impacting competitiveness in the regional markets.
During 1QFY23, global coal and oil prices remained high mainly because of the ongoing war between Russia and Ukraine that has impacted the oil supply from Russia, which in turn caused prices of commodities to increase further. However, the company could control its fuel and power costs by procuring local coal at cheaper rates, as reported in the latest report.
