The KSE-100 listed cement sector at Pakistan Stock Exchange (PSX) recorded a 13 percent year-on-year increase in profitability during FY26, reaching PKR138bn (US$497m) compared to PKR122bn in FY25, according to AHL Research. The sector’s topline grew 6 percent YoY to PKR636bn, supported by a seven per cent rise in total dispatches to 50.5Mt. Local dispatches surged nine percent, while exports slipped two percent, reflecting weaker overseas demand.
Gross margins remained steady at 33 per cent, aided by a modest 0.4 per cent increase in retention prices and a five percent decline in international coal prices. However, margins in the North came under pressure due to Afghan coal shortages and higher freight costs, partly offset by stronger local sales and lower-cost inventory utilization.
Other income rose one percent YoY to PKR42.9bn, with higher dividend inflows—mainly from Lucky Cement—balancing reduced interest earnings as average policy rates fell to 11 per cent in FY26 from 15 per cent in FY25. Finance costs dropped sharply by 33 percent YoY to PKR16.9bn, easing the sector’s financial burden and supporting overall profitability.
Cement prices averaged PKR1425 per bag in the North, down 0.4 per cent YoY, as weaker prices in 1HFY26 gradually recovered in the second half amid rising coal and freight costs. In contrast, prices in the South averaged PKR1,468 per bag, up 5.3 percent YoY, as producers raised prices to offset elevated input costs and sustain margins. Freight rates climbed to PKR 12,000–13,000t, adding cost pressure but enabling price adjustments.
Capacity utilisation improved to ~60 per cent in FY26 from ~56 percent in FY25, with regional utilisation at ~53 percent in the North and ~85 percent in the South, highlighting stronger demand dynamics in the southern market.
On the energy front, international coal averaged USD 97/ton, down five per cent YoY, though prices surged 22 per cent HoH in 2HFY26. Crude oil followed a similar trajectory, averaging USD 79/bbl after climbing 31.9 percent HoH in the second half, intensifying freight and input cost pressures.
Overall, profitability gains in FY26 were driven by higher local demand, stable margins, reduced finance costs, and improved utilisation, though energy price volatility and regional supply constraints remain key challenges for the sector.
by Abdul R. Siddiqi, Pakistan
