To say Lucky Cements performance in the fourth quarter of FY11 was stellar would be an understatement. High turnover not only helped the company record a marvelous 4QFY11 performance; but also brought the company to an overall healthy financial performance in FY11, despite the devastating effects of the floods in the first two quarters. At nearly Rs1.5 billion, profits earned in 4QFY11 were nearly 38 percent of the total profits earned in FY11. The increase in turnover in FY11 was helped mainly by an increase in prices in the local market. Prices of cement for Lucky increased by around 35 percent in the local market in FY11 compared to the price level of to the previous fiscal. Though local sales volume increased by over 11 percent in FY11 versus the same period last year, the decline of around 33 percent in export volumes for FY11 against FY10 - particularly for loose cement - resulted in the total volume declining by over 12 percent. Local sales volume hovered at nearly 3.5 million tons, while export sales netted to about 2.3 million tons, bringing the companys net sales volume to 5.8 million tons. The cost of sales also registered an increase in FY11, lead by the rise in prices of coal and diesel during the year. However, the costs decreased as a percentage of sales, helping buoy up gross margins by a percentage point. At the same time, the company was also helped by distribution costs, which fell by about 6 percent in FY11 relative to FY10. These were brought down by the slump in export volumes, with distribution costs declining from 14 percent of net sales in FY10 to 12.4 percent in FY11. Resultantly, both operating and net margins improved by 2.5 percentage points in FY11, relative to FY10. Along with its financial results, Lucky has announced its decision to establish a cement manufacturing plant with an annual capacity of 1 million tons in the Democratic Republic of Congo as a joint venture with a local partner, with partial debt and partial equity financing (see diagram). Going forward, cement prices in local markets are likely to stay up because of the rising cost of production, which can help beef up revenues in future. Better export prospects to India and Afghanistan are also key factors that will help the company shine in the current fiscal year as well.
============================================================== LUCKY CEMENT P&L ============================================================== Rs (mn) 4QFY11 Y/Y chg FY11 Y/Y chg ============================================================== Net sales 7,486 15% 26,018 6% cost of sales 4,808 0.4% 17,306 5% gross profit 2,678 58% 8,711 9% Gross margin 36% 37% 33% 3% distribution costs 724 -18% 3,236 -6% Operating profit 1,855 154% 5,161 22% Operating margin 25% 120% 20% 15% Profit after taxation 1,495 159% 3,970 27% Net margin 20% 124% 15% 19% EPS 4.62 12.28 -------------------------------------------------------------- Source: KSE notice ==============================================================
Comments
Comments are closed for this article.