Lucky cement profit plunges 54% in Q3

LAHORE: The Board of Directors of Lucky Cement Limited (LUCK) met recently to review the company’s performance and announced its financial results for the 3rd quarter ended March 31, 2020.

As per the financial results, the company reported a consolidated profit after tax (PAT) of Rs1.759 billion as compared to PAT of Rs3.860 billion during the same period last year, showing a decrease of 54.43pc.

LUCK’s unconsolidated PAT for the 3QFY20 clocked in at Rs998.840 million as compared to PAT of Rs2.793 billion in 3QFY19, showing a decline of 64.2pc.

Shankar Talreja, a senior analyst at Topline Securities, said that LUCK reported consolidated earnings of Rs1.4 billion (EPS: Rs4.45), down by 58pc YoY. The earnings came in above our estimates primarily due to lower-than-expected COGS.

He added that overall earnings went down in 3QFY20 due to decline in cement’s gross margins by 19.2ppts YoY to 11.6pc (vs. our expectations of 6.0pc). 

Talreja said that gross margin eroded on a YoY basis on the back of lower retention prices in both North and South regions, along with an increase in input costs.

In 9MFY20, gross margin of cement operations clocked in at 13.1pc, down 16.1ppts YoY, he said. The senior analyst stated that net sales of cement business has declined by 11pc YoY to Rs11.2 billion despite increase in volumetric sales by 8pc YoY to 2.1 million tonnes (cement and clinker both) as cement prices both locally and internationally (for exports) declined.

He maintained that ICI Pakistan, the LUCK’s subsidiary, also recorded a decline in earnings by 44pc YoY in 3QFY20 due to decline in sales by 5pc YoY amidst COVID-19 outbreak. Talreja opined that the major drag in earnings came from exchange loss of Rs373 million (49pc of Profit Before Tax-PBT) during the outgoing quarter vs Rs19 million in the same period last year.