Lucky Cement’s Profits Decline by 7% in H1 FY 2017-18

Lucky Cement (LUCK), one of the largest cement players in Pakistani market posted a total profit of Rs 6.54 billion in the half year that ended December 2017, down by 7% compared to Rs 7.03 billion in the same period last year, according to a company notice sent to the Pakistan Stock Exchange (PSX).

The prime reason behind the deterioration in earnings is margin shrinkage in the wake of higher coal prices

Earnings per share (EPS) decreased to Rs 20.25, down by 6.94% in the half year ending December 2017 compared to Rs 21.76 in the same period last year.

During the half year 2017-18, the company achieved an overall gross sales revenue growth of 5.2% as compared to the same period last year. It was mainly due to impact of higher Federal Excise duty and sales tax.

Despite a more than 46% decline in company expenses, the bottom line numbers dropped from previous year’s tally.

The company achieved an overall growth of 0.6% with a total sales volume of 3.76 million tons during the current half year as compared to 3.73 million tons last year. The local sales volume registered a growth of 16.9% (15.6% North and South 18.5%) to reach 3.21 million tons as compared to 2.75 million tons during the same period last year.

According to provisional cement dispatch data, LUCK’s export sales during the quarter declined by 42% YoY (in terms of volume).

At the time of filing this report, LUCK’s script at the exchange was trading at Rs 658, down by 1.30% with a turnover of 296,550 shares.

The Installation of additional line of 1.25 million tons per annum (Brownfield Expansion) was completed as per target in December 2017 and commercial operations commenced. With the addition of this new line, LUCK has become the largest cement producer in Pakistan.

The company is still in process of seeking necessary approvals from the government of Pakistan to start a Greenfield Cement Plant in Punjab.

Projects:

Kia Motors and its joint venture Lucky Cement, started the construction of the project in November 2017 and also signed a New Entrant Agreement with Ministry of Industries and Production in December 2017. The project aims to start commercial production in 2019.


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