Attock Cement's new line to start at end of FY23

Attock Cement's new line to start at end of FY23
30 November 2022

The management of Attock Cement Pakistan Ltd (ACPL) has announced that its new 4000tpd (1.2Mta) line will come online by the end of FY22-23. Top managed disclosed this at an analyst briefing held to discuss the recent financial performance and give an outlook of the company in the future, according to a report of AHL Research. 

The total expansion cost at Balochistan is estimated to be over PKR15bn (US$66.82m) and will be financed with a combination of debt and equity. Earlier, ACPL installed a 20MW solar power plant in FY21-22.

According to ACPL, FY21-22 was a challenging year for all cement players due to political instability, rupee depreciation, high coal prices, high energy tariff, an uptick in interest rates, the slowdown in domestic demand and unviable exports eroding utilisation levels. During this period, retention prices increased by over 20 per cent. Yet, margins dipped to 18 per cent against 22 per cent in the same period of the previous year, given a much bigger cost jump. 

Total dispatches in 1QFY23 declined to 356,000t versus 599,000t last year amid demand erosion on the back of urban flooding. Exports also witnessed a dip during the quarter as export prices were not attractive and did not cover operating costs. The company earned a profit after tax of PKR116m, lowered by 57 per cent compared to the same period last year. 

Retention prices increased by over 40 per cent YoY in 1QFY22-23. However, margins compressed to 17 per cent versus 19 per cent last year, led by higher manufacturing costs (fuel, power, rupee depreciation).

As international coal prices are very high, the company is using alternative fuels. Current RB1 coal cost is US$200/t, while coal from Mozambique is US$156/t.

Afghan coal is more viable for players in the north. The current coal mix of the company is 70 per cent imported coal and 30 per cent in alternative fuels such as local coal (Baluchistan and Bhikki). The imported coal price is around PKR45,000t, while the local is PKR30-35,000/t.

The company's 30-40 per cent of power reliance is on the national grid, whereas the remaining 60 per cent is captive power generation through WHR and solar power.

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