Islamabad, Mar 3, 2025: Pakistan’s cement industry witnessed an impressive 55% year-on-year surge in earnings, reaching Rs34.7 billion in the second quarter of FY25, fueled by higher exports and improved gross margins, according to data compiled by Topline Securities.
On a quarterly basis, profits jumped 44%, with overall revenue increasing 21% QoQ and 10% YoY to Rs196.8 billion. Despite a 1% YoY dip in local cement dispatches, the quarterly domestic sales saw a 23% boost, reaching 9.9 million tons.
Meanwhile, exports skyrocketed by 40% YoY and 24% QoQ, hitting 2.7 million tons, playing a crucial role in driving overall sector growth.
Cement prices in the northern region dropped from Rs1,515 to Rs1,447 per bag, whereas southern prices remained steady at Rs1,391 per bag.
The sector’s gross margins expanded by 5.5 percentage points YoY, reaching 33% in Q2FY25, compared to 27.5% in Q2FY24. This improvement was primarily due to declining coal prices and a better fuel mix.
Cement manufacturers in the southern region predominantly used Richards Bay coal, while northern players relied on a mix of Afghan and local coal.
Coal price movements:
- Richards Bay coal fell 7% YoY and 5% QoQ to Rs38,000 per ton.
- Afghan coal saw a 14% YoY and 12% QoQ decline.
- Local coal prices dropped 8% YoY and 5% QoQ.
The sector’s EBITDA climbed to Rs62.2 billion, marking a 32% YoY and 30% QoQ rise, with EBITDA margins expanding to 31.6%, compared to 26.4% in Q2FY24.
Additionally, finance costs dipped 10% YoY to Rs8.7 billion, supported by lower interest rates.
Key profit contributors:
- Lucky Cement (LUCK) led the sector with Rs7.3 billion in earnings, accounting for 21% of total profits, up 7% YoY, backed by higher sales and a 16% rise in other income.
- Fauji Cement (FCCL) reported Rs4 billion in earnings, reflecting a 51% YoY increase.
- Bestway Cement (BWCL) doubled its YoY profits, contributing 21% to total industry earnings.
The only company to report a loss was Dewan Cement (DCL), which posted a Rs45 million deficit in Q2FY25.
Looking ahead, Topline Securities anticipates lower profitability in Q3FY25 due to a seasonal decline in domestic dispatches during Ramazan and lower retention prices in the northern market.
However, YoY earnings are expected to remain strong, supported by falling coal costs.
