Lucky Cement Limited has announced its financial results for the first quarter ended September 30, 2022.
The company has reported a profit after tax of Rs. 6.9 billion on a consolidated basis, for the first quarter of the fiscal year 2022-23 (Q1FY23), of which Rs. 1.5 billion is attributed to non-controlling interests. The resultant earnings per share (EPS) for the quarter comes out to Rs. 16.85.
Moreover, on a consolidated basis, the company attained a gross revenue of Rs. 107.2 billion which is 54.8 percent higher than the revenue for the same period last year (SPLY). During the quarter under review, the consolidated net profit (attributable to owners of the holding company) decreased by 18.1 percent as compared to the SPLY.
Despite the higher top-line figures, the overall decrease in net profits, as compared to last year, is mainly due to a re-measurement gain of Rs. 1.8 billion recorded in the SPLY by ICI, on its acquisition of a further 11 percent interest in NutriCo Pakistan (Pvt.) Limited, increasing its total holding to 51 percent, and operational challenges faced by Lucky Electric Power Company Limited in the form of teething issues.
On an unconsolidated basis, Lucky Cement Limited was able to attain total dispatch volumes of 1.58 million tons during the quarter, a decrease of 30.2 percent as compared to the SPLY. The local sales volume declined by 26.2 percent, reaching 1.3 million tons during Q1FY23 compared to 1.7 million tons in Q1FY22 mainly on the back of floods and lower demand. In addition, export dispatches decreased by 43.5 percent, reaching 0.3 million tons, due to suppressed global demand.
With regards to the unconsolidated financial performance, the company reported gross revenue of Rs. 25.4 billion, an increase of 10.7 percent as compared to the SPLY.
Lucky Cement Limited reported a net profit after tax of Rs. 3.9 billion, after an increase of 17.3 percent as compared to the SPLY. Moreover, the EPS for Q1FY23 is calculated at Rs. 11.91, as compared to an EPS of Rs. 10.15 during the SPLY, an increase of 17.3 percent.
In line with the company’s growth strategy, the expansion project of 3.15 million tons in Pezu is progressing as per the schedule and the project remains on target to achieve its completion by December 2022.
A 34 MW solar power project, at Pezu Plant, is successfully being commissioned and will be operational by Q2 FY23 as per plan. Additionally, a 25.3 MW solar power project, at Karachi Plant, has been finalized.
Additionally, the company announced a share buyback of up to 10 million shares, which was approved by the shareholders in the Extraordinary General Meeting (EOGM) held on September 20, 2022. As of September 30, 2022, no shares were purchased under this buyback scheme.
This spillover of global and domestic economic challenges from last year, followed by extended monsoon season and floods in the country has resulted in a challenging start to the current financial year. A change in recent global price trends, indicates a new supply and demand equilibrium being achieved by market forces, accredited to the contractionary policies being employed by various economies of the world. The company expects that with the prevalent monetary tightening, around the world, commodity prices would ease off in the coming quarters.
Coal prices have recently started decreasing. The fall in prices has been aided due to monetary tightening by global central banks. If this downtrend in coal prices continues, pressure on margins would reduce in the near future. The government has also shown its intentions of stabilizing the Pakistani Rupee and halting the increase in interest rates and inflation. Domestic demand for cement is improving in the period post floods, and it is expected that cement dispatches will be higher than in the outgoing quarter.
