Pioneer Cement considers green and brownfield expansions
Pioneer Cement Ltd (PIOC) of Pakistan is continuously assessing new avenues and business ventures, including green and brownfield expansions in the country, according to the company’s FY21-22 Annual Report.
The introduction of the 10,000tpd Line III at PIOC's integrated cement works in Khushab district, Punjab province, has increased total capacity at the plant to 17,300tpd. In addition, a 12MW waste heat recovery (WHR) facility and a 24MW coal power unit have been in operation since November 2020. PIOC's new head office, which will be Lahore’s first LEED-certified building, is also nearing completion.
1QFY22-23 update
The company hosted an analysts briefing on 22 November 2022 to discuss its 1QFY22-23 results and future outlook, as reported by AKD Securities Ltd. PIOC posted a profit after tax of PKR586m (US$2.61m), up 22 per cent YoY. Cement sales during the July-September 2022 period fell by 18.6 per cent YoY to 634,000t. Capacity utilisation for the quarter stood at ~48.8 per cent. Management expects overall cement dispatches to be down by 10-15 per cent in FY23.
The company's current cement retention price is around ~PKR13,000/t. Management also commented on transportation costs to the southern region, putting them at around ~PKR60/bag or PKR1200/t. However, sales in the southern region for PIOC are currently negligible.
The current power mix for the company comprises the grid (30 per cent), WHR (20-25 per cent), and the remainder is met by coal-based generation. In the 1QFY22-23, the average cost of the grid stood at ~PKR32.5/kWh.
PIOC noted that it carries a one month coal inventory. The coal mix comprises 50 per cent Afghanistan coal, and the rest is a mix of local/imported coal. Average coal prices for the quarter were PKR54,000/t for Afghanistan coal and PKR32,000/t for local coal.
Outlook
Going forward, the gap between supply and demand in Pakistan is expected to widen further with the addition of new cement capacities in the coming months. However, domestic consumption is expected to increase as part of rehabilitation efforts in flood-hit areas due to the reconstruction of houses and infrastructure.
Increasing fuel prices and other input costs, reduced government spending on development projects, increased national grid tariffs and upward policy revisions are adversely affecting the cement industry’s performance. Despite these challenges, PIOC management continues to channel its efforts on improving operational efficiencies to add more value to shareholders.
