The performance of stocks may be choppy but the operational and financial performance of the country's cement manufacturers has been about as sure footed as can be in recent months. Thanks to booming domestic demand which continues to exhibit double-digit growth rate, dispatches and top line growth for the sector persists despite lower exports.
Halfway through FY16, Maple Leaf Cement (PSX:MLCF) stands among the sector's biggest beneficiaries of rising demand for cement, as its local sales continue to climb while decline in its exports has been relatively subdued as compared to other cement companies in the country. Consequently, net sales for the company have surged by 12 percent in 1HFY16, when compared to the same period of the previous fiscal.
The growth in top line is only half the story; as the global commodity price rout has ensured that just about all costs remain in check even as production rises. So it was that MLCF's gross margin has grown from 32 percent in 1HFY15, to 41 percent in 1HFY16. Distribution expense as a proportion of the top line has also ticked downwards slightly while administrative expenses as a percentage of sales.
As mentioned in a previous article titled: "MLCF: racing start to FY16", the company continues to slash its dependence on the national grid with the recent incorporation of its subsidiary: Maple Leaf Power Limited. Meanwhile deleveraging has coupled with lower interest rates to take a big bite out of MLCF's finance cost.
The cumulative effect of higher sales and tamed costs has been a stellar growth in the company's bottom line. Profit after tax grew by a whopping 63 percent in 1HFY16 when compared to similar period of the previous fiscal. Investors have also been treated to a Rs1.5 dividend per share to spread the cheer of the prevalent bonanza.
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