After beingsnubbed in the Attock Cement sale by its parent company, Pharaon Investment Group Limited (PIGL), Bestway Cement (PSX: BWCL), arguably one of the country’s cement heavyweightsseems to be making its point where it counts: the bottom line.In FY25, the company’s post-tax earnings are up 73 percent, with a revenue growth of only 4 percent.The company’s clinker production during this time dropped by at least 5 percent with a capacity utilization of about 44 percent.This may appear impressive, given the reduction in volumes, but for the company the size of Bestway, this would be graded a solid B plus.
By no measure is it a home run, for instance. Bestway has the second largest combined production capacity in the country, next to Lucky and by comparison lags significantly behind. In 9M, Lucky’s revenues were 15 percent higher than Bestway but was disproportionately higher than the latter in terms of earnings; 56 percent to be exact. Lucky has no finance costs to speak of. It has made investments that give it steady returns. In 9MFY25, Lucky’s other income contributed 48 percent to its before-tax earnings. Meanwhile, Bestway’s finance costs are nearly 8 percent of revenues with very little other income earned.
Compared to other smaller companies too, Bestway does not perform as well. Both Kohat and Cherat cement for instance have higher margins (gross profit and operating profit) than Bestway while Fauji and Mapleleaf have marginsat par with Bestway.
On its own, Bestway has done well. Solid pricing in the northern markets has ensured a growing margin profile. Despite a reduction in volumes, revenues expanded. In FY25, net margins are up 67 percent, finance costs are down from 11 percent to 7 percent (helped by falling interest rates), and overheads are maintained at 3 percent of revenue.
Improved demand in FY26, which is an expected side effect of economic rebound and with it, government’s development spending will provide impetus to revenues across the board. The fiscal measures to boost real estate activity, from tax reductions to markup subsidies, will temporarily restore volumes. For many smaller companies, the question is how to grow to the size of companies like Bestway. But for Bestway, the questions are different: will it break out of its set mould or will it continue to do reasonably well, but just.
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