Lucky Cement Limited (PSX: LUCK) achieved its highest-ever consolidated profit after tax of Rs. 59.5 billion for the year ended June 30, 2023, of which Rs. 10.7 billion is attributable to non-controlling interests.
This represents an impressive 63.4 percent year-on-year (YoY) increase compared to the same period last year (SPLY).
Along with the announcement of financial results, the Board of Directors of the Company also recommended a final cash dividend of Rs. 18 per share.
LUCK said in a note that the remarkable increase in profit includes a gain on disposal made by Lucky Core Industries, a subsidiary company, of approximately 26.5 percent of the issued and paid-up share capital of NutriCo Morinaga (Private) Limited resulting in an after-tax gain of Rs. 9.6 billion.
On a consolidated basis, the Company attained a gross revenue of Rs. 459.5 billion showcasing a significant 15.8 percent increase compared to the revenue of Rs. 396.7 billion last year. The noteworthy growth in gross revenue is mainly attributable to the full year’s commercial operations of Lucky Electric Power Company Limited.
The company paid Rs. 12.8 billion tax in FY23 versus Rs. 10.1 billion SPLY. It also reported earnings per share (EPS) of Rs. 152.9 for FY23 compared to Rs. 91.22 in FY22.
The finance cost of the company skyrocketed to Rs. 30.6 billion, up by 359 percent compared to just Rs. 6.66 billion last year.
At the time of filing, LUCK’s scrip at the bourse was Rs. 614, up 1.06 percent or Rs. 6.41, with a turnover of 361,582 shares on Tuesday.
Unconsolidated Result
On an unconsolidated basis, the Company reported gross revenue of Rs. 125.8 billion, which signified an increase of 15.9 percent as compared to the last year. The Company reported a net profit after tax of Rs. 13.7 billion under this metric.
Moreover, the EPS for the period is calculated at Rs. 43.06, as compared to an EPS of Rs. 47.31 during last year. This slight decline in the Company’s profitability is attributed to lower dividend income from subsidiaries and higher tax charges during the current year.
Manufacturing Growth and Economic Headwinds
Aligning with its growth strategy, the Company had announced the commencement of operations of Line-2, at Pezu Plant on December 22, 2022. This addition increases the production capacity of the Company’s cement production by 3.15 Million Tons Per Annum (MTPA), thereby, bringing the total capacity to 15.30 MTPA.
After the successful completion of the aforesaid expansion, the Company has further reinforced its rank and prominence as the largest manufacturer and exporter of cement and clinker in Pakistan.
Furthermore, to meet growing cement demand in Iraq and secure clinker supply for our associated company, Al Mabrooka Cement Manufacturing Company Limited, the decision has been made to expand clinker production capacity in Najmat Al Samawah Company for Cement Industry, Iraq.
This involves adding a new 1.82 million tons per annum production line, enhancing operational efficiency, and promoting clinker self-reliance in Iraq. Engineering contracts are in place, negotiations with potential contractors are ongoing, and construction is set to start in 1Q FY24, with an estimated 18-month completion timeline.
Continuing its commitment to clean energy, post the successful 34 MW solar power project, the Company has finalized commercial negotiations for a 25 MW Solar Power Project at Karachi Plant. Procurement of essential equipment and materials is finished, with the project anticipated for completion in 2Q FY24. These investments align with the Company’s goals of advancing renewable energy, reducing fuel import reliance, and enhancing cost efficiency.
Amidst ongoing economic challenges like high inflation, interest rates, and weakening currency, cement demand remains under pressure. Prospects of political stability and redirected funds for Public Sector Development offer potential economic revitalization and increased cement demand.
Easing commodity super cycle effects, reflected in falling oil and coal prices, are favorable for the cement industry, boosting margins via reduced coal costs. Yet, concerns persist, with potential Pakistani Rupee devaluation and higher energy tariffs posing margin pressure and export competitiveness risks across sectors, LUCK stated in a note.
