Pakistan’s leading cement producer Lucky Cement has recorded a strong rise in profit for the first half of the current fiscal year, driven by higher selling prices.
Profit for the first six months of FY12-13 rose 42.15 per cent rise to PKR4.29bn (US$44m). Cement prices during the period rose 13 per cent to PKR465/bag (US$4.76) in the south zone and eight per cent in the north to PKR438. Additional increasing income and declining financial charges supported the company's bottom-line.
Gross margins continued its upward trend with growth of 6.1 percentage points to 44.1 per cent as coal prices saw a four per cent drop. The cement producer also managed to cut back on its finance costs to PKR66m by reducing its long-term debt leverage. It also managed to boost its other income by supplying electricity to Hyderabad Electric Supply Company to PKR153m against just PKR0.77m in the same period of the previous year.
Revenue and sales
Despite a three per cent decline in sales volume, revenue was up by 14 per cent to PKR17.5bn, against PKR15.4bn in the corresponding period last year, mainly due to rising prices. The company’s domestic sales for the six months rose 5.5 per cent to 1.77Mt compared to 1.68Mt in the corresponding period of last year. On the other hand, cement exports declined by 14.6 per cent to 1.01Mt primarily because of the lower demand from the Gulf and African countries.
Upgrades and expansion
Lucky Cement is planning to upgrade its cement grinding mills at its Karachi plant to improve energy efficiency and reduce production costs. The company is also upgrading its packing machines at its Pezu plant.
The company is also is currently working on international expansion plans with a joint investment in Democratic Republic of Congo and a grinding facility in Iraq.