Lucky Cement reports fall in profit by 62% in 1QFY20

Lucky Cement Ltd of Pakistan has announced its financial results for the 1QFY20 ended September 2019. It posted a net profit after tax of PKR955.8m (US$6.1m) as compared to PKR2.492bn earned in the same quarter last year, which is contracted by 62 per cent. 

Apparently, fewer sales to PKR13.92bn from PKR6.01 during this period was one of the factors, besides company attributes it to adverse pricing and cost inputs in addition to higher distribution cost.

The company sustained a higher distribution and administrative expenses of PKR975m and PKR300m against PKR657m and PKR273m in the same quarter last year respectively.

Sale/dispatches
On a standalone basis, the company's overall sales volumes declined by 13.6 per cent to reach 1.64Mt during the first quarter ended 30 September 2019. The local cement sales volume registered a decline of 19.4 per cent and were 1.12Mt in comparison to 1.40Mt during the same period last year, however, the export sales volumes of Lucky Cement improved by 2.6 per cent to reach 0.51Mt as compared to 0.50Mt during the same period last year.

Axle-load issue
With the current economic challenges and macro-economic situation, Lucky Cement believes that in short to medium-term, the outlook of the cement industry will continue to remain challenging. The cut-throat pricing and cost escalation, due to 'Axle-load' limits' implementation has put adverse pressure on profitability. The cement industry is engaged with the government to resolve the Axle-load limits issue and is hopeful for its resolution.

Lucky Cement is also evaluating to increase its logistics' fleet size to mitigate the adverse impact of the Axle-load limits' implementation.

Expansion in Pakistan and overseas
Lucky Cement has shared progress on its brownfield expansion for cement production of 2.6Mta at its Pezu plant by informing Pakistan Stock Exchange that it has decided to further invest in setting up a grinding unit and have a fully integrated cement production capacity of 1.2Mta in Samawah, Iraq as part of the ongoing offshore joint venture project, with the existing local patner.

In addition, Lucky Cement also reported progress on its investment project of 1 X 660MW supercritical coal-based power project at Port Qasim, in Pakistan.