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After facing a comparatively prolonged recession due to the economic downturn coupled with the Covid-19 health crisis, Pakistan ‘s listed cement sector has begun reporting exponential growth figures.
In the first quarter ended September 2020, Lucky Cement posted a consolidated after-tax profit of Rs5.13 billion, up 236% compared to a profit of Rs1.53 billion in the same quarter of the previous year.
“Earnings of the company are much higher than our expectations, by Rs10 per share,” said Topline Securities’ Deputy Head of Research Shankar Talreja. The earnings stemmed from higher-than-expected gross margins in Pakistan’s cement business, which stood at 28%, he said.
The company also invested in automobile business where it earned gross margins of 12%, said Talreja. “We estimate net sales from the automobile business to have come in at Rs16 billion, up 77% quarter-on-quarter,” the analyst said.
Similarly, in the first quarter of the current fiscal year 2020-21, Kohat Cement Company’s profit soared 475 percent compared to the same period last year. In the same quarter last year, the company reported a profit of Rs507.1 million against Rs88.2 million. During the year, the company’s EPS amounted to Rs2.52, against Rs0.44 in the corresponding year of last year.
Maple Leaf Cement reported a profit of Rs555 million last week for the quarter ended September 30th, 2020 (EPS Rs0.51) after reporting a loss for four consecutive quarters.
Pakistan’s local and foreign cement sales reported a quarter-on – quarter increase of 52 percent, led by 35 percent higher volumes and increasing retention prices, said Talreja. Taurus Securities analyst Asjad Hussain said the rise came on the back of a spike in overall dispatches.
The increase in cement revenues, he said, was attributed to higher retail prices in the northern region and higher retention prices due to a fall in federal excise duties.