Pakistan cement companies expect mixed results for 6MFY19
Pakistan cement companies are scheduled to announce their financial results for the second quarter and six months of FY18-19 in coming months. Top cement companies are expected to post a growth of over two per cent QoQ, or 37 per cent YoY decline for 1HFY19.
According to a research report of IGI Finex Securities Ltd, based on provisional numbers, volumetric sales depict a modest four per cent YoY growth during 1HFY19, primarily owing to healthy exports growth of 48 per cent YoY, while local sales remained low, posting a decline of 1.5 per cent YoY.
Analysts suggest the outlook for modest domestic cement demand in the near term, while fresh capacities will gradually come online. Meanwhile, recent rounds of depreciation of the Pakistani rupee have made exports rather more attractive. The southern players, especially Lucky Cement and Attock Cement, would greatly benefit from exports.
PM's 5 Million Housing Project
Meanwhile, according a report of Elixir Securities Pakistan, building low cost houses was one of the major cornerstones of PTI's 2018 general election manifesto. As per the latest developments, Prime Minister has already announced the project as 'Naya Pakistan Housing Programme'. The pilot phase will be launched in seven cities which include Faisalabad, Sukkur, Quetta, Dera Ismail Khan, Islamabad, Gilgit and Muzaffarabad. While experts believe the project will take time to take off, it can be considered as a major breakthrough for Pakistan cement industry.
Impact on cement sales
Since the project is aimed at targeting lower middle income households, experts are assuming average house sizes of 600ft2. As per feedback with various builders/real estate developers, approximately 10Mt of cement is required to construct a 600ft2 house. Hence construction of 5m houses will create an additional cement demand of 50Mt spread over the life of the construction phase (the government envisions to complete the project in five years).
