A review of the financial performance of Pakistan's cement sector during FY22-23
Topline Research of Pakistan has reviewed the financial performance of the top 13 listed cement companies (out of 15) on the Pakistan stock exchange (PSX). These 13 companies comprise 99 per cent of the total sector market capitalisation. Pakistan's cement sector saw profits down three per cent YoY in FY22-23 despite the pre-tax profitability up 11 per cent YoY in FY22-23.
The research house reports that Pakistan’s listed cement sector has reported after-tax earnings (PAT) of PKR51bn (US$180m), down three per cent YoY in FY22-23, as opposed to a growth of eight per cent in FY21-22. The negative earnings growth is primarily due to higher tax expenses amid the implementation of a 10 per cent super tax.
However, the cement sector recorded pre-tax earnings (PBT) of PKR100bn, up 11 per cent despite a 16 per cent YoY fall in total cement dispatches and a 78 per cent YoY increase in finance cost. The improvement in PBT is primarily backed by an increase in sales by 21 per cent YoY to PKR590bn in FY22-23, led by a 37 per cent YoY increase in cement prices.
The listed sector reported the highest ever net sales PKR590bn, up 21 per cent in FY22-23 owing to higher retention prices. Gross margins of the sector witnessed slight improvement, clocking at 25.1 per cent in FY22-23 vs. 24.9 per cent in FY21-22, led by lower coal prices. Other sector income was up by 16 per cent YoY to PKR15.2bn in FY22-23 amid higher dividend income and interest income.
Selling and distribution costs increased by six per cent YoY to PKR10bn in FY22-23 due to increased local fuel prices and an inflationary environment. The finance cost of the sector clocked in at PKR28.8bn in FY22-23, up 78 per cent YoY due to higher KIBOR and borrowings of the sector.
Future estimates
Topline Research expects local cement dispatches to grow by five per cent in FY23-24 due to improved agricultural income and economic stability. Moreover, margins remain stable amid stable cement prices.
