Pakistan's Cement Sector Set to Report Robust Performance in 2QFY24

Pakistan's Topline Cement Universe is expected to demonstrate a 10% year-on-year core profitability growth, reaching Rs12.6 billion in the second quarter of the fiscal year 2024.

This growth is attributed to an improvement in gross margin and higher other income. Despite a 12% year-on-year decline in local cement sales, net sales are anticipated to increase by 5% year-on-year to Rs93.5 billion, supported by a 16% year-on-year rise in average local cement prices.

The decline in cement dispatches in 2QFY24 is due to various factors, including the imposition of axle load, high construction costs, and a high base effect from the previous year. The sector's capacity utilization is expected to be 61% in 2QFY24, down from 65% in 2QFY23.

The gross margin of the sector is projected to improve by 4% year-on-year to 29% in 2QFY24, driven by lower coal prices and higher retention prices.

Cement players in the south region mostly relied on Richards Bay coal, while those in the north region used a combination of Afghan and local coal. Richards Bay coal prices averaged US$116 per ton in 2QFY24.

Source: Trade Chronicle