Karachi, May 08, 2023 (PPI-OT): Pakistan Cement: Dispatches remained dampen in Apr’23, down 17.5%YoY

Domestic cement dispatches for April’23 clocked in at 2.53mn tons, down 24.6%/25.1% MoM/YoY. Region-wise, North offtakes decreased by 22.5%/24.8% MoM/YoY to settle at 2.11mn tons. Likewise, volumes for the South witnessed a steep drop of 33.7%/26.5% MoM/YoY to report at 0.42mn tons.

Richards Bay coal prices have declined amidst fallen demand from Europe, currently hovering at US$126/ton compared to CYTD avg. of US$146/ton.

Increase in the cement prices and elevated gross margin kept the profitability of the companies intact despite decline in the offtakes, wherein 9MFY23 profits of AKD Cement Universe increased by 11.6% compared to SPLY.

With an overall shift in macro-policy focus from growth in previous years to consolidation, we expect sector volumes to decline by 18% for FY23 (FYTD down 17.5%YoY).

Overall, we continue to advocate LUCK, MLCF, and FCCL (Dec’23 TP: 632.5/38.1/16.4 per sh) on the back of low leverage and better production efficiencies contributing to their margins going forward. Additionally, timely expansions will lead to retention of market share.