Karachi, May 02, 2023 (PPI-OT): LUCK 3QFY23 Result Review - Healthy earnings with a surprise second buyback announcement

Lucky Cement Limited (LUCK) surprised the market with announcement of its second buyback of 23.8mn share, along with its 3QFY23 result earlier today. Company has posted unconsolidated earnings of PkR4.0bn (EPS: PkR12.8) compared to PAT of PkR3.3bn (EPS: PkR10.5) in previous quarter, an increase of 22%QoQ and in line with our expectations.

Net sales of the company clocked in at PkR25.0bn compared to 25.6bn in the previous quarter, a mere decline of 2%QoQ. This decline is attributable to 2.6%QoQ decline in the sales volume. While topline increased by 17%YoY on the back of increased cement prices offsetting the impact of decline in sales volume.

Gross margins improved by 50bps to settle at 25.9% vs. 25.4% in the quarter before. Where the impact of increase in coal price is anticipated to be offset by expected improvement in the gas supply in the said quarter.

Other income increased by 86%QoQ to clock in at PkR1.6bn compared to PkR0.8bn in the previous quarter. This increase is majorly attributable to dividends from Lucky Core Industries Limited (LCI).

Overall, on the consolidated accounts, earnings posted at PkR21.0bn (EPS: PkR67.1) compared to PkR10.5bn (EPS: PkR33.4) in the previous quarter, an increase of 101%QoQ. This increase is majorly attributable to higher earnings from LCI (gain on the sale of NutriCo Morinaga (Pvt) Limited), albeit this increase in LCI earnings is non-recurring.

Finally, Company's board of directors approved the purchase/buyback of up to 23.8mn shares (22% of current free float). The purchase for the purpose of cancellation will commence on 2nd June'23 until 20th Nov'23. To note, company previously completed buyback of 10mn outstanding shares on 17th Mar'23 with a total transaction price of PkR4.4bn (Average share price: 435.6/sh).