Pakistan’s cement industry recorded a significant 55% year-on-year increase in earnings, reaching Rs34.7 billion in the second quarter of FY25, driven by improved gross margins and a rise in exports, according to data compiled by brokerage firm Topline Securities.Â
Quarter-on-quarter, earnings grew by 44%, with total sector revenue rising 21% QoQ and 10% YoY to Rs196.8 billion.
Despite a 1% YoY decline in domestic dispatches, the quarterly domestic sales increased by 23% to 9.9 million tons. Export dispatches surged by 40% YoY and 24% QoQ to 2.7 million tons, providing a major boost to overall sales. Meanwhile, average cement bag prices in the northern region dropped from Rs1,515 to Rs1,447, while prices in the south remained steady at around Rs1,391.
The sector’s gross margins expanded by 5.5 percentage points YoY, reaching 33% in Q2FY25, up from 27.5% in Q2FY24, largely due to declining coal prices and an improved fuel mix.Â
Cement producers in the southern region primarily relied on Richards Bay coal, while those in the north used a mix of Afghan and local coal. Richards Bay coal prices dropped 7% YoY and 5% QoQ to approximately Rs38,000 per ton, while Afghan coal fell 14% YoY and 12% QoQ, and local coal prices declined 8% YoY and 5% QoQ.
Sector-wide EBITDA reached Rs62.2 billion, reflecting a 32% YoY and 30% QoQ growth, with EBITDA margins rising to 31.6% compared to 26.4% in Q2FY24. Meanwhile, finance costs declined by 10% YoY to Rs8.7 billion, aided by lower interest rates.
Lucky Cement (LUCK), Bestway Cement (BWCL), and Fauji Cement (FCCL) accounted for 54% of total sector profits. LUCK contributed 21% of the total sector earnings, reporting Rs7.3 billion in profits, up 7% YoY, driven by higher sales and a 16% rise in other income. FCCL reported Rs4 billion in earnings, up 51% YoY, while BWCL’s profits doubled YoY, contributing 21% to sector earnings.
The only company to report a loss was Dewan Cement (DCL), which recorded a Rs45 million deficit in Q2FY25.
Topline Securities projected profitability to decline in Q3FY25 on a QoQ basis due to lower domestic dispatches during Ramazan and a downward trend in retention prices in the northern region. However, YoY earnings are expected to improve, supported by lower coal costs. LUCK and FCCL remain top picks in the sector.
