Pakistan cement firms' profitability remain vulnerable in 1H19

Both Attock Cement and Lucky Cement recorded a fall in profit in their half-yearly results. According to Intermarket Securities Ltd, during 1H19 it is expected that the top cement firms will post a combined profit of PKR6.3bn (US$45.2m) during this period, down by 25 per cent YoY.

An analyst said that the hefty PKR depreciation (by 21 per cent YoY), higher coal prices (up 11 per cent YoY) and a decline in local dispatches are likely to weigh down on profitability, offsetting the gains from an increase in net retention prices. However, earnings are likely to post an increase of 11 per cent QoQ due to higher domestic cement prices and cooling coal prices. A major development during the quarter included recovery of cement prices by PKR27/bag (up five per cent).

Cement dispatches
During 2QFY19 (Oct-Dec 2018), overall cement dispatches grew four per cent YoY to 12.5Mt, led by notable jump in exports by southern players owing to surplus capacity in the region and continuous depreciation of the PKR. Exports clocked in at 1.8Mt, up by 58 per cent YoY. Based on current capacity, utilisation levels stood at 91 per cent during the quarter.