Lucky Cement Limited has reported a net profit after tax of Rs. 955.85 million during Q1 2019-20, which is 61.7% lower as compared to Rs. 2.48 billion for the same period last year.
On a standalone basis, the company’s overall sales declined by 13.6% to reach 1.64 million tons during the quarter. Local cement sales registered a decline of 19.4% and were 1.12 million tons in comparison to 1.40 million tons in Q1 2018-19, however, the export sales of the company improved by 2.6% to reach 0.51 million tons as compared to 0.50 million tons.
As for the company’s standalone financial performance, its gross sales revenue declined by 13.0% to Rs. 13.93 billion compared to Rs. 16.01 billion earned last year.
The decrease was due to lower sales and cut-throat pricing because of lower demand and retentions on account of stringent`Axle load’ limits’ implementation. The standalone earnings per share of the company are PKR 2.96/share as compared to PKR 7.71 / share for 2018.
The distribution cost of the company increased to Rs. 975 million from Rs. 657 million, while other income was posted at Rs. 930 million as compared to Rs. 644 million.
On a consolidated basis, the company achieved a gross turnover of PKR 34.43 billion which is 9.9% higher as compared to last year’s turnover of PKR 31.32 billion.
Progress of Ongoing Projects
Lucky Cement shared the progress on its brownfield expansion for cement production of 2.6 million tons per annum at its Pezu Plant. It also informed that it has decided to invest in setting up a grinding unit and have a fully integrated cement production capacity of 1.2 million tons per annum in Samawah, Iraq as part of the ongoing offshore joint venture project with the existing local partner.
In addition, the company reported its progress on the investment project of a 660 MW supercritical coal-based power project at Port Qasim.
With the current economic challenges Lucky Cement believes that in short to medium-term, the outlook of the cement industry will continue to remain challenging. The cut-throat pricing and cost escalation due to the `Axle load’ limits’ implementation has put adverse pressure on profitability.
The cement industry is engaged with the Government to resolve the `Axle load’ limits’ issue and is hopeful for its resolution. The company is also evaluating to increase its logistics fleet size to mitigate the adverse impact of the `Axle load’ limits.