Lucky Cement plans domestic, global investments to enhance capacity

KARACHI: Lucky Cement Limited, one of the largest cement maker in the country, on Thursday said it planned new international and local investments worth around Rs30 billion to enhance its production capacity.

The announcement was made along with financial results for the nine months period ended March 31, 2018 at the local bourse on Thursday. Lucky Cement’s profit fell six percent to Rs9.80 billion in July-March FY18. Lucky Cement CFO Irfan Chawala said after continued delay in expansion plans up north, the company has decided to increase the cement production capacity of its brownfield project in Khyber Pakhtunkhwa and to setup a greenfield clinker production unit in Samawah, Iraq. The CFO said the capacity of Pezu Plant, Khyber Pakhtunkhwa would be increased by 2.60mtpa at an investment of Rs17.50 billion, whereas the clinker production facility of 1.20mtpa capacity at Samawah, Iraq would be setup at an investment of Rs12.6 billion ($109 million).

One spokesperson of Lucky Cement said that both the projects would be completed by the fourth quarter of FY2019/20.

Pakistan’s 24 cement plants have capacity of producing 47 million tons of clinker and 49 million tons of cement a year. Lucky is one of the top manufacturers in the country.

During the last nine months (July 2017 to March 2018) total dispatches of cement were recorded at 34.75 million tons, up 14.70 percent against 30.30 million tons last year.

Units up north recorded highest local sales of 25.88 million tons against 21.69 million tons the same period last year, while the southern units sold 5.42 million tons locally against 4.85 million tons.

Local sales of the northern and southern zones recorded an increase of 19.30 percent and 11.83 percent, respectively.

Contrary to an increase in the local sales, exports of both zones fell. Northern zone recorded exports of 2.43 million tons, down by 3.78 million tons compared to 2.85 million tons during the same period last year, while the southern zone recorded exports of 1.01 million tons only, which is lower by 17.38 percent to 1.22 million tons the same period last year.

Local clinker sales of both the zones remained at 633,121 tons only during July-March FY18 period.

Highest exports of 1.49 million tons were made to Afghanistan, which remained higher by 3.14 percent against 1.44 million tons last year.

The second largest dispatches were to India at 895,878 tons, lower by 2.66 percent against 920,349 tons while exports to all other countries remained at 1.05 million tons, lower 23.76 percent compared to 1.38 million tons during the same period last year. The local cement sales volume of Lucky Cement during the nine months registered a growth of 16.9 percent (north 19.7 percent and south 13.7 percent) to reach 5.04 million tons compared to 4.31 million tons reported during the same period last year.

The company’s local clinker sales volumes declined by 79.5 percent to 0.06 million tons during the current nine months as compared to 0.29 million tons in the same period last year.

It resulted in the overall local sales growth of 10.9 percent to reach 5.10 million tons during the nine months period, compared to 4.60 million tons during the same period last year.

Exports registered a decline of 20.3 percent to 0.74 million tons compared to 0.93 million tons reported last year. On a consolidated basis, Lucky Cement reported a net profit of Rs11.94 billion for the nine months ended March 31, 2018 which is 1.0 percent lower as compared to the same period last year. Consequently, consolidated EPS attributable to the company during the nine months decreased to Rs36.91 compared to Rs37.27 reported during the same period last year. The earnings per share (EPS) for the nine months were recorded at Rs30.31 compared to Rs32.23 reported during the same period last year.

The company’s gross sales revenue increased by 7.1 percent to Rs50.63 billion compared to Rs47.29 billion reported during the same period last year. The increase in revenue was mainly attributable to higher federal excise duty and sales tax. In addition, the company also reported progress on investments in automobile manufacturing plant under license from KIA Motors Corporation and 1 X 660 MW supercritical coal-based power project at Port Qasim.