Power Cement expects real estate to increase sales

Power Cement expects real estate to increase sales
08 October 2018

While other southern cement producers have been  wary of a slowdown, Power Cement Ltd (PCL), owned by the Arif Habib Group, has a need for expansion. "The Power Cement plant will start production on full capacity in June 2019 and it will produce 7700tpd of clinker and 9600tpd of cement," said Kashif Habib, the company's CEO.

PCL, formerly Al-Abbas Cement, has developed its business through the construction of high-rise buildings and housing in Kerachi, Hyderabad, Thatta, Kotri and outher southern cities, which have helped to raise cement demand. It has relied on the Defence Housing Authority (DHA) and Bahria Town, Pakistan's largest private sector real estate developer, for business. 

"Bahria Town was the big developer over the last 8-10 years, and they developed major projects during that time," said Mr Habib. "The constructed high-rise buildings, smaller houses, and infrastructure. Now, as construction at Bahria Town tapers off, it is ramping up in DHA City, and we expect it will hit its peak in the next few years.

"If the government starts the construction of large dams in the northern parts of the country, the domestic consumption of cement would increase manifold," said Mr Habib. "All cement companies are hoping for a big boost to infrastructure spending by the government."

While PCL saw cement dispatches increase YoY by three per cent to 504,000t in the fiscal year ending 30 June 2018, revenue for the period fell by 0.5 per cent. Net profits also declined by 10.9 per cent.

Although exports may also benefit Power Cement when its new capacity cones on-stream, it is hoped that the government will improve incentives for cement exports.

"Cement factories are paying 30 per cent of the cost of cement in sales tax, federal excise duty, and customs duties. These huge taxes make us uncompetitive in the international markets," said Mr Habib.

FY18 results
Power Cement has announced its financial results for FY18 recently by declaring of decrease in profit to PKR311m (US$2.52m) from PKR460m in the same period last year. It decreased by 32.39 per cent YoY.

Net sales of the company during the period stood at PKR4.34bn from PKR4.48bn in year ago period. It incurred a distribution cost of PKR115m against 106m in the same period last year.

The administrative expenses stood at PKR131m compared to PKR76m incurred in the same period previous year. The company has a production capacity of 945,000tpa of cement in Nooribad, Dadu in Sindh.

Published under Cement News