Pakistan cement sector’s profitability falls 90%

Pakistan cement sector’s profitability falls 90%
Published: 02 March 2010

The profitability of Pakistan’s cement sector plunged 90 per cent YoY during the first half (July-December) of FY10 primarily on account of lower retention prices, despite an estimated rise of 13 per cent YoY in sales.

The sample including 14 out of the listed 21 cement companies, representing 80 per cent of the market capitalisation, revealed that companies with profits in both the periods (1HFY10 & 1HFY09) posted a decline of only 5.2 per cent YoY - suggesting a harder period for smaller players.

However, with an anticipated rise in local demand and gradual improvement in prices, the sector’s future performance remains bullish on the back of government’s focus on infrastructure development to meet the rising energy crisis in the country, higher than expected growth in export sales during Jul-Jan FY10 and gradual recovery in local cement prices due to improved demand outlook.