Cement producers are planning to expand production capacity by more than 40 per cent from nearly 69 million tonnes to nearly 99m tonnes over the next several years in anticipation of 10-15pc growth in sales every year, according to a local media report/
Quoting an official of the All Pakistan Cement Manufacturers Association (APCMA), the report stated that almost every cement manufacturer had planned to increase their production capacity through greenfield and brownfield projects. Many projects, especially the brownfield ones, are expected to come on line in the next two years, adding nearly 18m tonnes to the existing capacity.
“Almost 95pc of the new capacity is being planned in the north – mostly in Punjab – where the most growth in demand is coming”.
The report states that the industry foresees a spike in sales as construction activity picks up further on the back of a generous housing package announced last year by the prime minister to help the economy to recover from the Covid-19 pandemic impact.
In addition, mega infrastructure schemes, resumption of work on CPEC related projects and dams, massive reduction of 625bps in the central bank’s policy rate from 13.25pc to 7pc during March and June last year as well as the availability of cheaper long-term financing for new and old projects under the Temporary Economic Refinance Facility (TERF) initiative, which has diluted the borrowing cost of the industry across different sectors, have added to the allure of undertaking such ambitious expansion plans.
It may be mentioned that total cement dispatches – domestic and exports both – jumped 19pc to 48.3m tonnes during the period between July and April from 40.5m tonnes a year ago. Domestic sales are up by almost 19pc to 40.2m tonnes and exports by about 20pc to 8m tonnes.
The profits after tax of the listed companies grew to Rs35bn during the first three quarters of the present fiscal year to March from a loss of Rs8bn last year as industry sales spiked 37pc to Rs264.3bn.
During the third quarter the industry profits rose to Rs18.4bn, or more than half or the total profits during nine months of the current fiscal year.