Atif Malik, an analyst at Jahangir Siddiqui Capital Markets, said cement companies, in line with their consecutive three years of positive earnings’ growth, from financial year 2003 to financial year 2005, during their recently announced half-year results, continued with their upbeat performance. “Thanks to double-digit growth in demand, regular increase in cement prices and cost efficiencies done by the manufacturers,” he said.
Net sales grew handsomely by 44 per cent mainly due to increased cement dispatches and rising prices, whereas gross profits depicted an 80 percent growth on the back of better retention prices and cost efficiencies. Profit-before taxes, depicted a massive increase of 95 percent. However, profit after tax growth rate was less at around 82 percent. This is mainly due to lower effective tax rate during the first-half of the financial year 2005.
It is expected that the sectors’ profitability would further grow on the back of anticipatory further increase in cement prices and upbeat demand. For the financial year 2007 and financial year 2008, however, profits are expected to stabilize due to the fact that new capacities that will come online during these two years.
