A 24 per cent increase in cement price during the quarter ended December 31, helped the sector slash its net losses by 50 per cent in comparison with the same quarter last year, a brokerage house said on Wednesday.
The cement sector posted a cumulative loss of PKR794m (US$9.3m) in the second quarter of 2011, which was 50 per cent lower than PKR159m losses the sector recorded in the corresponding quarter in 2010, said Amreen Hirani, analyst at Invest & Finance Securities.
Earnings of the sector have been hit by a multitude of factors resulting in the sector posting yet another net loss. “The cumulative loss was seen mainly due to heavy borrowings with rising interest rates,” she said.
The finance cost surged by 10 per cent to PKR3,007m in the quarter against PKR2733m in second quarter of fiscal year 2010, she added.
Interestingly, the net sales of the sector improved by 18 percent in terms of rupees on the back of a 24 per cent increase in average cement price.
Accordingly, nine companies out of 17 sample companies reported stronger profit margins driven by cement price hike than the corresponding period last year, she added.