Lucky Cement profits likely to fall

Lucky Cement profits likely to fall
Published: 21 October 2010

On Thursday, Pakistan largest cement producer and exporter, Lucky Cement Ltd (LCL) is expected to post a profit after tax (PAT) of PKR837m (US$9.84m) in first quarter of financial year of 2010-11 (July-Sept) against PKR1103m PAT earned in corresponding period last year, reflecting a fall of 24% on a YoY basis.

Lucky is expected to post EPS of PKR2.59 for 1QFY11 in its board meeting tomorrow.

An analyst of Invest & Finance Securities Ltd has pointed out that despite local cement prices escalating by 8% QoQ, decline of 12% YoY in total dispatches was witnessed due to obstacles in transport caused by floods and sluggish demand of cement in the month of Ramadan in Pakistan. In addition, financial charges are projected to show an increase of 87% YoY (PKR289m) in 1QFY11 due to fresh borrowing. However, on a positive note, an increase in imported coal prices is not likely to have much of an effect on Lucky Cement until the end of 1HFY11 as the company has hedged prices through a futures contract.

The net sales of company is expected to increase by 2% PKR6160m in 1QFY11 from PKR6042m but it would observe a 4% decrease in gross profit to PKR2190m from PKR2234m in 1QFY10.

Lucky Cement came into existence in 1996 with a daily production capacity of 4200tpd and is currently  a key cement plant of Pakistan as well as rated amongst the few best plants in Asia. With 13,000tpd production facilities in Pezu in Punjab as well as 12,000tpd installed in Karachi, Sindh, it aims to become the hub of cement production in Asia.