Kohat Cement presses ahead with Punjab project

Kohat Cement Company (KOHC), based in northern Pakistan, has started developing the infrastructure for a greenfield production line in Khushab, Punjab province, the company said during a corporate briefing on its latest set of financial results.

According to KOHC, land for the project has been acquired, while work on the development of infrastructure (such as utility connections, roads, etc) is in progress. The new line is expected to cost approximately PKR35bn (US$165m), comprising a 40 and 60 per cent mix of equity and debt, respectively. The project is expected to come online by the 1QFY25.

Separately, the balancing, modernisation and replacement (BMR) of Line 3 at the Kohat plant in Khyber Pakhtunkhwa is underway, which will increase the plant's fuel consumption efficiency. At a cost of around PKR750m, the project will be funded through internal cash generation and is expected to come online by the 4QFY23.

1QFY23 financial performance
In the 1QFY23, KOHC posted a profit after tax of PKR1.78bn, up 28 per cent YoY. Revenue increased by 30 per cent to PKR8.852bn from PKR6.803bn a year earlier. Clinker and cement production were down to 589,626t and 692,904t, respectively, over the quarter. Total sales fell by 20.3 per cent YoY to 688,955t from 864,437t a year earlier.

The company's average maximum retail price (MRP) stood at PKR995/bag (US$4.43) in 1QFY23 compared to PKR650/bag in the 1QFY22 and PKR955/bag in the 4QFY22.

Management expects local cement dispatches to be down by 10-12 per cent in FY23. The industry's local cement dispatches were down by 25 per cent YoY in the 1QFY23, as highlighted by Topline Pakistan Research. Political instability, high inflation, reduced foreign exchange reserves, the weakening Pakistan rupee against the US dollar, aggressive taxation measures, increasing coal prices in international markets, projected hike in electricity prices and the Russia-Ukraine war are being cited as factors that could adversely affect the Pakistan economy, as well as KOHC. However, it is hoped that the government of Pakistan will take measures to overcome challenges that are impacting cement demand in the country.