Lucky Cement: concrete performance in 1HFY13

Lucky Cement kicked off the second quarter of the ongoing fiscal with a strong performance. The top line touted growth of 14 percent compared to the same period of FY12, stemming from 21.3 percent escalation in domestic sales and 3.7 percent growth in export sales.
Domestic sales for the Company spurred by 5.5 percent in 1HFY13 over the same period last year. On the flip side, export volume dropped by 14.6 percent, during the same period to 1.01 million tons. However, strength in international prices helped Lucky post an improvement in revenues from exports, despite lower volumetric sales abroad.
The edgy export performance took its toll on the cumulative volumetric growth of the company which posted a YoY decline of 2.8 percent to tally 2.786 million tons in 1HFY13. Cumulative sales volume dropped by 2.8 percent, but retention prices were supportive in the domestic market too, which helped buttress revenue per ton by 17 percent to Rs6,284 per ton.
Significant decline in coal prices helped keep cost of sales in check, which rose just three percent over the same period, mainly due to oil and gas costs. This translated into a healthy gross margin of 44 percent in 1HFY13 as against 38 percent during the same period last year.
Another noticeable factor to quote here is that until June 30, 2012, Lucky Cement had no share of short-term borrowings in its current liabilities, however during 2QFY13, its short-term borrowing amounted to Rs2.55 billion which is symptomatic of the Companys profound dependence on short-term borrowings during the period. This swelled current liabilities by 1.07 times shaving off the current ratio from 2.64 in 1HFY12 to 1.35.
After successfully setting up a subsidiary; Lucky Holdings for the purpose of acquisition of ICI Pakistan, the Company recorded long-term investment of Rs5.6 billion. Despite debt-to-equity ratio enlarging from 0.22 in 1HFY12 to 0.34 in 1HFY13, the Company was able to shed its finance cost by 61 percent due to lax monetary policy.
All these factors rendered a staggering bottom line growth of 42 percent in 1HFY13; along with earnings per share (EPS) of Rs13.27 compared to Rs9.33 during the same period last year.
Going forward, the growth in demand for cement is expected to show strength in domestic and export markets, promising good prospects for Lucky during the remainder of this fiscal.

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Lucky Cement Limited

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Rs (in mn)                      1HFY13     1HFY12  Change (%)

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Net Sales                    17510.603  15374.219         14%

Cost of sales                 9821.082   9559.678          3%

Gross profit                  7689.521   5814.541         32%

Distribution & marketing co   2042.142   1741.765         17%

Profit after tax              4290.204   3018.123         42%

Earning per share (Rs)           13.27       9.33         42%

Gross Margin                       44%        38%

Net Margin                         25%        20%

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Source: KSE Notice