Lucky Cement believes cement exports have become more attractive

Lucky Cement Ltd held its corporate briefing on 12 November to discuss the financial results of 1QFY24-25 (1 July-30 September 2024) and the company's outlook. BMA Research covered the event and texted that on an unconsolidated basis, earnings reached PKR6.5bn (US$23.26m) in 1QFY24-25 vs profit of PKR6.9bn in 1QFY23-24, down five per cent YoY  due to lower gross margin.

The company's local dispatches declined by 22.5 per cent, reaching 1.37Mt in 1QFY24-25, due to higher cement prices and lower utilisation of government spending on projects. However, the company's overall market share rose from 18.1 to 21.3 per cent.

The company's management reported that profitability from foreign cement operations remained strong, driven by robust demand across all three locations and improved margins. It further stated that all foreign cement lines operate at over 90 per cent utilisation.

According to the company, exports have become more attractive due to lower coal prices, though they generate only a contribution margin. Current export prices are similar to the previous quarter, approximately US$40/t for cement and US$30/t for clinker.

It also reported successfully commissioning a 28.8MW wind energy project in Karachi, which will provide approximately 55 per cent of the company’s total energy needs with renewable energy.

Outlook
The company expects lower inflation, reduced interest rates, and an anticipated further policy cut at the next monetary policy meeting, which will boost local cement demand. Furthermore, macroeconomic stability could allow the government to boost infrastructure spending, which may help reduce the 15 per cent decline recorded in the first four months of FY24-25.

by Abdul Rab Siddiqi, Pakistan