Pakistans largest cement producer, Lucky Cement, recorded its best ever financial performance in FY12, as the company reported an increase of 71 percent year-on-year, in earnings. The stellar financial performance is mainly driven by top line growth, as the revenues net of sales tax and excise duty soared by an impressive 28 percent against the corresponding period last year. FY12, proved to be a record breaking year for the local cement industry as it witnessed highest ever local sales in the countrys history. Lucky Cement did well to keep pace with the cement industrys annual sales growth of 3 percent, and also maintained its overall share in sales at 18.4 percent. It was the contraction in the export market, which subdued the overall growth, as Lucky witnessed a 4 percent year-on-year decline in export sales. It was, however, the robust increase in local cement retention price which enabled the company record its higher ever revenue. Ex-factory cement prices, according to industry sources, increased roughly around 25 percent year-on-year during FY12 to Rs350 per bag. In the final quarter, the export retention prices also improved slightly, mainly on account of rupee depreciation against the greenback. The local sales revenue (62 percent share in revenue mix) surged by a massive 42 percent due to improved retention price. Gross profit margins improved considerably by nearly 5 percentage points to 38.2 percent, as the combination of improved retention prices and significant decline in imported coal price, played in favour of the cement giants primary margins. Lucky Cement also showed remarkable cost efficiency in handling its distribution expenses, which as a percentage of sales, went down from 12.4 percent previous year, to 9.7 percent in FY12, aiding the bottom line. The companys cash flow management remained exemplary during the year as it generated a little over Rs10 billion form operations, the bulk of which was spent on repayment of long-term and short-term loans. FY12 was an eventful year in the rich history of Lucky Cement as it is now seen as a fast emerging conglomerate on the horizon. The acquisition of (75.8 percent) ICI Pakistan, spells the companys strategy to diversify into well established business segments of PSF, chemicals and soda ash. The company intends to carry minimal debt on its books, in order to finance this transaction, which should ease a lot of concerns amongst stakeholders. The progress on the joint venture in cement plant in the Congo has entered the negotiation stage with the Congolese government and the project financing terms are being finalised. Similarly, the JV investment in cement grinding facility in Iraq has also moved a step ahead, because contracts for plants and machinery have been signed. Going forward, the company expects local cement consumption to increase in FY13 in view of upcoming general election which may speed up the spending on development projects. Lucky Cement is also hopeful of its export prospects in Afghanistan, calling it a natural export market.
=================================================== LUCKY CEMENT =================================================== (Rs mn) FY12 FY11 chg Sales 33,323 26,018 28% Cost of sales 20,601 17,306 19% Gross profit 12,721 8,711 46% Gross margin 38.2% 33.5% 14% Distribution cost 3,237 3,236 0% Pre-tax profit 8,324 4,321 93% Taxation 1,542 350 340% PAT 6,782 3,970 71% EPS (Rs) 20.97 12.28 ===================================================
Source: KSE notice
Comments
Comments are closed for this article.