Mixed dispatches expected for Pakistan's cement sector in FY19

Mixed dispatches expected for Pakistan's cement sector in FY19
19 July 2019

Pakistan's cement industry is likely to report mixed dispatches data for FY19. According to a sector research report released by Topline Securities, domestic dispatches will drop by three per cent, while total dispatches will increase one per cent in FY19 with the sales mix shifting in favour of overseas exports by southern players.

Cumulatively, exports are expected to increase 37 per cent with cross-border exports (Afghanistan and India) falling by 19 per cent while seaborne exports are rising by 141 per cent. However, All Pakistan Cement Manufacturers Association (APCMA) is yet to share with media last year dispatch data.

In FY19 capacity utilisation would stand to 84 per cent. Since the southern players recovered their volumes through exports, this capacity utilisation is remains sufficient. On the downside, the cement southern companies fetched lower prices abroad. A high-cost scenario, together with low revenue per tonne sold paints a gloomy picture for the bottomlines of most players, some being worse off than others, the report added.

This expected FY19 output would impact margins and profitability for the cement industry beyond expectations, analyst observed and added that the industry had embarked on greenfields and brownfield capacity enhancements hoping that 'game changing' CPEC would turn their fortunes around while riding the wave of an expanding economy courtesy heavy government spending, and believing the growth rates would sustain. However, this is not happening.

Published under Cement News