AKD Securities Limited – Off the Analyst’s Desk (January 30, 2023)

Karachi, January 30, 2023 (PPI-OT): LUCK: 2QFY23 Result Review

Lucky Cement Limited (LUCK) announced 2QFY23 result where company posted unconsolidated PAT of PkR3.3bn (EPS: PkR10.2), (Downward) 15/ (Upward) 32% QoQ/YoY. The result was slightly below our expectations as cost of sales clocked in on the higher side where we believe higher than expected power costs played a role owing to the gas supply cut to industry and increase in prices of Furnace Oil.

Net Sales clocked in at PkR25.6bn for 2QFY23, up by 30/24% QoQ/YoY because of the improvement in the local offtakes (up by 34% to 1.7mn tons against 1.3mn tons in 1QFY23). However, on the yearly basis, increase in cement prices (up by ~40% in 2QFY23 vs SPLY) mainly attributed to increase in topline amidst lower dispatches.

Gross margins clocked in at 25.4% against 30.6/27.3% for 1QFY23/SPLY, we believe drop in the margins are majorly because of increase in the power cost (Gas supply cut in winters and increase in prices of Furnace Oil pushed companies to meet their power requirement from Grid, pushing their cost upward).

Other income decreased by 58%QoQ where low dividend from subsidiaries was the main reason as company only received PkR0.1bn in 2QFY23 against PkR1.5bn in 1QFY23 (PkR0.8/0.7bn from LCI/LMC).

On consolidated accounts, company posted PAT of PkR10.5bn (PS: PkR32.51), up by 93/62% QoQ/YoY. This increase in mainly attributed by profitability of LEPCL (92% of plant availability factor to capacity in 2QFY23 vs 78% in last quarter) and improved profitability of foreign cement operations, partially offsetting the low profits from LCI and LMC.