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Luck has nothing to do with how Lucky Cement (PSX: LUCK) has quadrupled its bottom-line since last year. In 9MFY21, the company’s growth in demand, positive retention and better fixed costs absorption has done wonders for its financial standing compared to last year which was slow-going but still an envious position to be in compared to other cement manufacturers in the industry who were in losses. Lucky continues to prove its leading position.

The company has its plants in both the north and south zone and has been able to grab both markets sufficiently with tremendous offtake. Being closer to the port allows it to export cement and clinker overseas which has seen an immense demand over the past year. Sales including clinker exports and loose cement grew 31 percent during the period that brought revenue growth to 45 percent. The resultant revenue per ton sold on average shows an improvement 10 percent vouching for better pricing. Meanwhile, the costs per ton sold declined by 11 percent owning to increased plant efficiencies achieving at the north plant as well as better absorption of fixed costs.

The company’s margins are now recovering back to pre-covid and pre-economic slowdown period. At 31 percent gross margins, and prospects of demand moving forward, the company may start rivalling with the margins during FY16 and FY17 where 50 percent was not too far away into the horizon.

One must credit the company’s other income that has supplemented the profits a lot—44 percent during the 9M period. Meanwhile, overheads including distribution and administrative expenses stayed at about the same level as last year—12 percent to last year’s 13 percent. Low debt levels on its balance sheet make finance costs for the company almost inconsequential at less than one percent.

For the new expansion at the Pezu site, the company is availing the government’s TERF facility that provides concessionary financing to cover a portion of the cost. This expansion will take the company’s total production capacity to 15 million tons catering to a resuscitated construction sector across the country and revived CPEC/hydro power projects. Lucky’s luck is not running out any time soon.

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