Cherat Cement's local dispatches fall while exports rise

The management of Cherat Cement Co Ltd (Gulham Faruque) held a corporate briefing session on 28 September 2023 to discuss the financial performance during FY23 and its outlook. To recall, the company posted earnings of PKR4.4bn (US$15.3m) in FY23 compared to PKR4.5bn in the previous year, a decline of one per cent YoY. The annual decline was due to higher financial charges and taxation, as presumed by AKD Research and AHL Research. 

Dispatches local/export
In terms of sales volumes, local sales witnessed a decline of 22 per cent to 2.539Mt YoY during the year, while exports rose by 13 per cent to 331,347t YoY sent to Afghanistan. Management expects this export growth trend to continue as the company is closest to the Torkham Border (the main Pak-Afghan transit route). Total cement export of Pakistan to Afghanistan stood at 1.070Mt in FY23, a surge of 17 per cent. The export price to Afghanistan, on average, is US$45-47/t.

Management anticipates marginal industry sales growth of 3-4 per cent YoY in FY24. Regarding pricing, it expects the industry to maintain price discipline.

Expansion programme
In FY23, the company completed balancing, modernisation and replacement (BMR) on Line I, taking the total capacity to 4.5Mta. Post BMR activity, the efficiency for Line 1 is close to Line 3. The company commissioned a 1.70MW solar power plant during FY23, taking the total capacity to 13.05MW.

On the further expansion front, the company has acquired assets (land and mining) from Saif Cement in DI Khan for ~PKR1.3bn as the requirement of the greenfield project. However, the management has not shared project capacity, costs and timelines due to significant rupee devaluation and Letter of Credit restrictions.