TC Mar-Apr 2021 Issue

TRADE CHRONICLE
Cement companies show significant
profits during 2QFY20 in Pakistan
Pakistan top cement manufacturers
listed on Pakistan Stock Exchange
(PSX) recorded significant profitability
with improved margins during the last
quarter of 2020. The experts believe
this trend is likely to continue in reaming
quarters of the ongoing financial year.
According to an analyst of Spectrum
Securities Limited, the cement sector
profitability continued in 2QFY21 as the
bottom line of the thirteen companies
posted profits to the tune of PKR 11bn
as compared to PAT of PKR 5bn in the
preceding quarter. The surge in profits
is mainly attributed to i) 11 per cent
Luck Cement overseas production
reaches to 4.12Mta
Lucky Cement Limited has informed
Pakistan Stock Exchange (PSX) that the
Greenfield cement production facility
Bangladesh cement makers add
two bulk carries to fleet
Bangladesh Meghna Group of
Industries have launched two of the
largest dry bulk carriers, viz MV Meghna
Princess & MV Meghna Adventure, on
March 10, 2021, at the Chittagong port.
Meghna Group is one of the top three
cement producers and marketers of
Bangladesh, operating with its two
strong brands, namely Fresh and
Meghnacem Deluxe. State Minister for
Shipping Khalid Mahmud Chowdhury
QoQ higher dispatches,
ii) 6 per cent QoQ
improvement in average
retention prices and ii)
decline in finance cost by 12 per cent
QoQ. iii) After coming online of new
capacities, the depreciation cost also
declines.
The 13 companies (out of 16), which
represent 99 per cent of the sector’s
market capitalization, include DGKC,
MLCF, FCCL, KOHC, GWLC, DCL,
ACPL, BWCL, CHCC, LUCK, PIOC,
POWER, and THCCL.
In 2QFY21, these companies’ gross
margins clocked in at 25 per cent
vs 19 per cent in 1QFY21 on higher
dispatches and better retention prices.
While the industry’s utilization
stood at 91 per cent during
2QFY21 vs 86 per cent in
1QFY21.
Selling and distribution
expense remained intact as
exports declined by 15 per cent
QoQ. During 1HFY21, exports
to Afghanistan declined by
13 per cent YoY. The sector’s
finance cost reduced by 12
per cent QoQ on short-term
deleveraging loans as liquidity
in Samawh, Iraq, with a
capacity of 1.2Mta, has
successfully commenced
its commercial operations
with the effect from March 10, 2021.
According to Faisal Mahmood, GM
Finance & Company Secretary of
Lucky Cement, the said cement
production facility is a joint venture
with the Al-Shamookh group of Iraq
and consequent to this addition, Lucky
Cement’s overseas cement capacity
attended the event as
Chief guest.
Chairman of Chittagong
Port Authority Rear Admiral M
Shahjahan was the special guest while
Commodore Abu Jafar Md. Jalal Uddin,
Director-General of the Department
Shipping was the guest of honour, says
a company announcement.
Mostafa Kamal, Chairman and
Managing Director of Meghna Group
of Industries, in the opening remarks,
said Meghna Group is carrying goods
in the river and sea. The two new shops
improved in the market.
Average coal prices (FOB) stood at
$58/t (considered a 2-month lag impact)
during 2QFY21 compared to $56/t in
the previous quarter. At the same time,
USD/PKR parity averaged at PKR 161
in 2QFY21 vs PKR 167 in 1QFY21.
Outlook
The cement sector remained in the
limelight during FY21TD on the
resurgence in construction activities
given government schemes and
extraordinary tax relief and monetary
relief by Stae bank of Pakistan, which
kept the cement demand intact. The
expected strong demand encourages
the existing manufacturers to enter into
brownfield expansion.
The analyst expects that the local
cement demand to remain upbeat in
the medium term given the government
and the private sector’s infrastructure
projects. Furthermore, the easing
monetary policy would fuel up economic
growth. The cement sector is highly
leveraged, and experts expect that the
low-interest rates to keep financial cost
at a minimal level. In contrast, improved
liquidity of the industry will result in
lower working capital needs.
now stands at 4.12Mta, which is as
follows:
• Cement Grinding Plant in Basra, Iraq:
1.74Mta
• Fully integrated Cement Plant in
the Democratic Republic of Congo:
1.18Mta
• Fully integrated Cement Plant in
Samawah, Iraq: 1.20Mta.
equipped with the latest technology and
ultramodern equipment now included in
the vast fleet of the Group, consisting of
145 vessels.
He expressed hope that in comparison
with the chartered vessel, the benefit
of lower freight is available in these
self-owned ships, which will positively
affect the competitive price of goods,
including cement.
Besides these, by hoisting the national
flag, these vessels will uphold the
country’s image in the world, he said.
TRADE CHRONICLE - Mar - Apr - 2021 - Page # 22