Cement companies to work at full capacity

Cement companies to work at full capacity
Published: 16 May 2006

The cement cartel has decided to eliminate quota among local cement manufacturers ands cement manufactures have decided to utilise 100 per cent of their production capacity, according to sources in the Pakistan cement industry.

Presently, the local cement factories are running at around 80 per cent to 86 percent capacity utilisation, and it has been decided to take the capacity utilisation to 100 per cent in order to keep prices down or at the current levels and to prepare for the competition emerging from the import of cement.

During the last month the cement sector performance and prices came under lime light with issues such as high cement output prices, which started to move up during March this year. Since then, prices began to go up and peaked to historic heights of Rs 390 to Rs 450 per bag in March-April, from Rs 270 to Rs 290 per bag during January-February at the retail level. Prices were around Rs 300 to Rs 350 per bag at ex-factory level.

The massive increase in prices led to action by the government, which was in the form of ban on export and duty-free import of cement from regional countries, including India with Rs60 per bag freight subsidy.

According to an estimate, net sales of top nine cement companies grew by 47 per cent in first nine months of the current year, mainly due to increased cement dispatches and rising prices, whereas, gross profits depicted an 83 per cent growth on the back of better retention prices by the producers. Profit before taxes also depicted an increase of 82 per cent, however profit after tax growth rate was less around 69 per cent.