Power Cement Ltd released its half-yearly financial report ending on 31 December 2023, wherein the company reported sales revenue at PKR16.84bn (US$60.23m), representing an increase of 33 per cent compared to the same period last year.
The gross profit for the first half of FY23-24 surged to PKR3.95bn, indicating a growth of around 43 per cent compared to the first half of FY22-23. In the face of lower export prices, increased electricity prices and other challenges on the cost side, the company has improved its gross profit, primarily due to a substantial increase in sales revenue.
Despite the improvements in revenue and profit margins, as a result of the very high interest rates prevalent in the country, financial costs went up to PKR2.54bn from PKR1.79bn last year. Therefore, the company has suffered a loss after tax of PKR470m in the first half of FY23-24. The total sales volume of cement and clinker locally and export was 1.389Mt during this period.
Outlook
Pakistan recently received a tranche of US$705.6m following the successful completion of the first review by the Executive Board of the IMF under Standby Arrangements, bolstering market confidence and exchange rate stability. The country has met all structural benchmarks in the last review, with increased gas prices being the previous. However, the economic outlook is influenced by factors like political stability, ongoing IMF reforms, inflationary pressures, and high borrowing costs. These factors and a volatile domestic business environment challenge our product demand and profitability in the coming quarters.
Rising building costs, particularly for cement, have subdued domestic construction interest. The recent axle load regime has impacted the industry, causing reduced vehicle capacity, operational inefficiencies, and higher export transportation costs. These challenges prompted the industry to explore international markets alongside excess production capacities. Continuous monitoring and efforts to enhance operational efficiency are crucial for maintaining financial stability in this dynamic environment.
According to the company's chairman, Nasim Beg, and CEO Muhammad Kashif Habib, to tackle these challenges, the company's commitment lies in optimising operational efficiency and implementing cost rationalisation measures for its products. The management team remains steadfast in consolidating resources and aligning strategies.
