Lucky Cement to add 1.25MT in production capacity

KARACHI: Lucky Cement, a leading cement producer in Pakistan, will raise its production capacity by 1.25 million tons a year through $30 million in investment, a bourse filing said on Friday.  

“Keeping in view the growing demand of cement in Pakistan on the back of public and private sector construction projects, as well as mega infrastructure development projects under the CPEC (China Pakistan Economic Corridor), the company has decided to increase its cement production capacity of Karachi plant by 1.25 million tons per annum,” said the company secretary in a notice issued to the Pakistan Stock Exchange. 

The secretary said the total cost of the plant will be around $30 million. The company didn’t mention when the proposed plant would be commissioned.

A market source, however, said the plant might potentially come online within the next one and half years. 

Analyst Nabeel Khursheed at Topline Securities said this will be in addition to the earlier announced cement capacity expansion of 2.3 million tons a year in the Punjab. The plant is expected to be commissioned by 2018/19. 

After these expansions, the company’s total production capacity will increase to 11.30 million tons a year from the existing 7.75 million tons a year. The province accounts for 81 percent or 37 million tons of the total production capacity in the country. 

“Karachi expansion is likely to add around Rs8 to 9 per share (around 14 percent) to LUCK’s bottom-line,” he said.

Analyst Faizan Ahmed at JS Research expects the LUCK’s market share to jump to 20 percent from the current 17 percent (based on the installed capacity in the country). “We remain optimistic of demand outlook in the country and expect this project to be value accretive,” he said.

Lucky is yet to announce its June quarter results. It profit was up eight percent to Rs11.80 billion for the nine-month period ended March 31. 

In July-March, the cement industry, as a whole, produced 28.35 million tons, up 9.9 percent as compared to 25.78 million tons during the same period last year.

The cement maker was recently stripped of its status as the largest manufacturer after the acquisition of Lafarge Pakistan Cement by Bestway Cement Limited. 

“We believe that the company's south expansion is motivated by rising demand in the region due to fast-track developments at Gwadar port,” Ahmed said.

Established in 1996, Lucky Cement Limited is a prominent producer of cement in the country as well as in Asia. 

The company has a production facility in Pezu, Khyber Pakhtunkhwa with capacity of 13,000 tons/day. The production is focused on ordinary, sulphate resistant cement and slag cement.