Lucky Core Industries Limited: performance and outlook

Lucky Core Industries Limited (PSX: LCI) was incorporated in Pakistan as a public limited company as Khewra Soda Ash Company in 1953.

In 1966, after a year of acquisition of Fuller Paints Limited, the company changed its name to ICI Pakistan Manufacturers Limited. Later Imperial Chemicals (Private) Limited was also merged into the company.

In 2012, Lucky holdings Limited acquired majority shareholding of the company from AkzoNobel and became the holding company of LCI. The company changed its name from ICI Pakistan Limited to Lucky Core Industries Limited in December 2022.

The company undertook other major acquisitions of Cirin Pharmaceuticals Limited, Wyeth Pakistan Limited and Pfizer Pakistan Limited in the subsequent years.

The company is engaged in five diverse businesses i.e. Soda Ash, Polyester, Chemicals & Agri Sciences, Pharmaceuticals and Animal Health.

Pattern of Shareholding

As of June 30, 2025, LCI has a total of 92.359 million shares outstanding which are held by 10,325 shareholders. Associated companies, undertakings and related parties have the majority stake of 81.60 percent in the company. Within this category, Lucky Cement Limited tops the list, holding 55 percent shares of LCI. Local general public holds 7.66 percent shares of LCI followed by insurance companies accounting for 5.91 percent shares.

Banks, DFIs and NBFIs hold 1.57 percent shares while Modarabas and Mutual funds have 1.01 percent shareholding of LCI. The remaining shares are held by other categories of shareholders.

Financial Performance (2021-25)

With the exception of 2025, LCI’s topline grew in all the years under consideration. Its bottomline posted a plunge in 2024. In 2022, LCI’s margins took an upward flight followed by a downtick in 2022. In 2023, while gross margin further shed off its value, operating and net margins significantly improved.

In 2024, gross and operating margins strengthened while net margin eroded. In 2025, all the margins ticked up. The detailed performance review of the period under consideration is given below.

In 2021, LCI mustered 16.83 percent year-on-year growth in its net revenues which clocked in at Rs. 62,617.97 million. This came on the back of growth across all five business segments. Animal Health Business managed to top the list with 31 percent higher sales on account of revival in demand from both poultry and livestock segments.

Pharmaceutical attained 27 percent growth in revenues on accrount of new and timely product launches and higher toll income. Polyester business also witnessed 22 percent rise in revenues on account of revived demand from the textile industry. Moreover, increase in cotton prices due to supply chain disruptions from the US and China also proved to be a good omen for the Polyester business in 2021.

Cost of sales grew by 12.15 percent year-on-year in 2021 which drove the gross profit up by 35.92 percent year-on-year in 2021. GP margin also surged to 22.9 percent – the highest ever posted by the company.

Distribution and administrative expenses posted 22.59 percent and 19.81 percent spike respectively in 2021 due to higher payroll expense on account of inflation, higher advertisement and publicity charges as well as outward freight and handling charges.

Other expense posted steep 90.83 percent rise in 2021 on the back of increased provisioning for WWF and WPPF. Higher profit on deposit accounts, higher scrap sales and higher dividend from subsidiary was offset by lower dividend from associate company resulting in a paltry 5 percent increase in other income in 2021.

Operating profit grew by 39.34 percent year-on-year in 2021 with OP margin escalating to 14 percent. Better cash generation across the business segments resulted in lower borrowings for working capital requirements. This coupled with monetary easing during the year translated into 62.77 percent fall in finance cost in 2021. Unlike other years, LCI made an exchange gain of Rs.55.98 million during 2021 due to stronger Pak Rupee.

The bottomline boasted a staggering 92.50 percent year-on-year growth in 2021 to clock in at Rs.5959.446 million with NP margin of 9.52 percent. EPS also ascended to Rs.64.52 in 2021. This was against net profit of Rs.3095.858 million recorded in 2020. NP margin was recorded at 5.8 percent while EPS clocked in Rs.33.52 in 2020.

2022 witnessed the highest year-on-year growth of 38.89 percent in LCI’s topline which was recorded at Rs.86,972.18 million. While all the business segments registered robust sales growth during the year, Polyester and Soda Ash business were the star performers with 51 percent 50 percent year-on-year growth in net turnover respectively in 2022.

Polyester business grew on the back of strong demand from textile industry while Soda Ash business banked on export market expansion as well as domestic demand recovery.

Cost of sales grew by 41.61 percent year-on-year on the back of Pak Rupee depreciation coupled with commodity super cycle prevailing in the international market on account of Russia-Ukraine crisis. Higher energy charges further fuelled the cost hike.

This translated into GP margin descending to 21.41 percent in 2022 from its all time high of 22.91 percent in 2021. Distribution expense grew by 20.10 percent year-on-year due to higher sales volume, better advertising budget, increase in fuel prices, mounting sea freight charges and unavailability of vessels.

Administrative expense grew marginally by 4.51 percent in 2022 despite inflationary pressure and increase in the employee headcount from 2030 in 2021 to 2182 in 2022.

Other expense tumbled by 11 percent in 2022 due to lower provisioning done for WWF and WPPF. No dividend from associate and subsidiary companies pushed other income down by 62.56 percent year-on-year in 2022. Operating profit grew by 31.91 percent in 2022, but OP margin dipped to 13.3 percent. Finance cost enlarged by 38.10 percent year-on-year in 2022 on the back of record high discount rate coupled with increased borrowings for working capital requirements and capital expenditure projects in Soda Ash and Polyester businesses.

The company also incurred an exchange loss worth Rs.545.03 million in 2022 as against exchange gain recorded in the previous year. Imposition of super tax further dampened the bottomline growth to 4.85 percent in 2022. LCI’s net profit stood at Rs.6,248.587 million in 2022 with NP margin of 7.18 percent. EPS slightly grew to Rs.67.66 in 2022.

In 2023, LCI’s topline grew by 25.89 percent year-on-year to clock in at Rs.109,486.11 million. The growth was led by Soda Ash business on account of 135,000 tons per annum expansion in Soda Ash project undertaken during the year. Other segments also posted healthy revenues in 2023. Upward revision in prices also buttressed the topline in 2023. Cost of sales grew by 27.52 percent year-on-year in 2023 on account of fluctuations in global commodity prices, Pak Rupee depreciation and import restrictions.

GP margin slumped to 20.40 percent in 2023. Distribution and administrative charges surged by 6.92 percent and 24.51 percent respectively in 2023 due to higher freight charges on account of fuel price hike as well as greater sales volume. Moreover, expansion in production capacity also resulted in increased human resource requirements which drove up the payroll expense.

Inflation also came into play to push the operating expenses up. Other expense rose by 42.15 percent year-on-year in 2023 due to higher profit related provisioning. Other income posted a huge 449.40 percent growth in 2023 on account of hefty dividend income earned from Lucky Core PowerGen Limited, a wholly owned subsidiary of LCI.

Moreover, the company also earned dividend income from short-term investments made from sales proceeds of divestment of NutriCo Morinaga (Private) Limited (NMPL) shares.

This pushed LCI’s operating profit up by 37.61 percent in 2023 with OP margin jumping up to 14.53 percent – the highest since 2018. The company made an exchange loss of Rs.964.51 million in 2023 due to Pak Rupee depreciation. Furthermore, finance cost multiplied by 251.31 percent in 2023 due to higher discount rate and increased borrowings to manage working capital requirements.

However, these were offset by a gain worth Rs.9842.15 million on the sale its stake in NutriCo Morinaga Private Limited (NMPL) which constituted 26.5 percent of the total issued and paid up share capital of NMPL. Consequently, net profit grew by 120.4 percent year-on-year in 2023 to clock in at Rs.13,772.409 million with NP margin of 12.58 percent – the highest since 2018. EPS also climbed up to Rs.149.12 in 2023.

In 2024, LCI’s net sales grew by 10 percent year-on-year to clock in at Rs.120,460.33 million. This was on account of higher export volumes of Soda Ash as it was the first year after commissioning of 135,000 tons per annum expansion project. The company exported 155,789 tons of Soda Ash during the year. Net sales of Pharmaceuticals,

Chemicals & Agri sciences and Soda Ash posted year-on-year growth of 33 percent, 17 percent and 15 percent respectively. Conversely, Animal Health and Polyester business remained at the last year level.

Unprecedented level of inflation, Pak Rupee depreciation and elevated energy cost resulted in 7.35 percent higher cost of sales in 2024, however, improved sales mix, cost optimization and one-off price adjustment provided to the industry in July 2023 resulted in 20.46 percent higher gross profit in 2024 with GP margin climbing up to 22.32 percent.

Distribution expense multiplied by 37 percent in 2024 due to higher salaries of sales force as well as elevated outward freight and handling charges due to robust export sales.

Administrative expense ticked up by 4 percent due to higher payroll expense which was the result of inflationary pressure as well as workforce expansion from 2184 employees in 2023 to 2227 employees in 2024. Other expense ticked up by 3.51 percent in 2024 mainly on account of higher profit related provisioning and donations.

However, it was offset by 74.58 percent higher other income recorded by LCI in 2024 on the back of vigorous dividend income from investment in mutual funds.

Operating profit built up by 25.18 percent year-on-year in 2024 with OP margin climbing up to its highest level of 16.54 percent. Finance cost mounted by 22.81 percent in 2024 due to elevated discount rate which was partially offset by lower borrowings during the year.

Gearing ratio fell from 14.10 percent in 2023 to 0.56 percent in 2024. Plunge in gearing ratio was not only because of lesser outstanding borrowings but also because of higher cash & bank balances, increased short-term investments and a massive increase in capital reserves as the management transferred Rs. 18,000 million from revenue reserves to capital reserves.

LCI recorded exchange gain of Rs.117.06 million in 2024 as Pak Rupee appreciated by 3 percent against US Dollar. In the previous year, LCI recorded tremendous gain of Rs.9842.15 million from the sale of its stake in NMPL. The absence of this income in 2024 translated into 19.11 percent dip in net profit.

LCI’s net profit was recorded at Rs.11,140.217 million in 2024 with EPS of Rs.24.12 and NP margin of 9.25 percent. Barring the impact of gain on sale of investment in NMPL, LCI’s net profit would have been higher in 2024 versus last year.

In 2025, LCI’s topline recorded a marginal downtick of 0.37 percent to clock in at Rs.120,013.16 million. During the year, the company acquired some assets from Pfizer and related entities which buttressed its pharmaceutical business. Net turnover from pharmaceutical business grew by 72 percent in 2025.

However, it was offset by demand slowdown in Soda Ash, Animal Health, Polyester and Chemicals & Agri businesses. Cost optimization, inflation led price increase and an encouraging sales mix resulted in 1.67 percent uptick in gross profit in 2025 with GP margin ticking up to 22.78 percent. Lower export of Soda Ash during the year resulted in 1.84 percent decline in distribution expense in 2025.

Administrative expense also ticked down by 7.63 percent in 2025 due to lower payroll expense. Other expense ticked up by 5.71 percent in 2025 due to increased profit related provisioning. Other income ticked down by 4.47 percent in 2025 due to lower return on short-term investments following rate cut. During the year, LCI recorded gain on bargain purchase worth Rs.292.56 million from acquisition of assets from Pfizer.

Operating profit grew by 4.29 percent in 2025 with OP margin jumping up to 17.31 percent. Although the company’s outstanding borrowings significantly increased during the year to meet its working capital requirements and to finance its capital expenses, monetary easing resulted in 37.51 percent drop in finance cost in 2025.

Gearing ratio surged to 4.57 percent in 2025. LCI registered exchange loss of Rs.58.85 million in 2025 due to 2 percent depreciation of Pak Rupee against the greenback. Net profit strengthened by 4.47 percent to clock in at Rs.11,638.410 million in 2025.

This translated into EPS of Rs.25.20 and NP margin of 9.70 percent in 2025. It is to be noted that in 2025, the company conducted stock split of the face value of its ordinary shares from Rs.10 to Rs.2 in order to improve stock liquidity and investor accessibility. This resulted in an increase in the number of shares from 92.359 million to 461.795 million.

Recent Performance (9MFY26)

During the nine-month period of the ongoing fiscal year, LCI posted 7.22 percent downtick in its net sales which clocked in at Rs.85,445.75 million. Growth in pharmaceutical business (10 percent) and animal health business (19 percent) was offset by a decline in Polyester (20 percent), Soda Ash (8 percent) and Chemical & Agri Science businesses (4 percent).

The decline in these businesses was due to heavy influx of cheap imported products following the reduction of import duty in the Federal Budget 2025, lackluster demand, devastative floods and prolonged period of rainfall in the country.

Cost of sales dipped by 5.81 percent in 9MFY26 due to curtailed operations in most of the business lines. Gross profit deteriorated by 12 percent in 9MFY26 with GP margin falling down to 21.51 percent from GP margin of 22.68 percent recorded in 9MFY25. Lower sales volume resulted in 6.10 percent thinner distribution expense in 9MFY26.

Administrative expense surged by 15.95 percent in 9MFY26 seemingly due to higher payroll expense as the company has been hiring additional resources to support its growing local pharmaceutical portfolio and also to cater greater disease incidence in the key livestock regions.

During the 3QFY26, LCI commenced its veterinary medicine factory at Sheikhupura. Lower provisioning done for WWF and WPPF translated into 11.98 percent dip in other expense in 9MFY26. Other income deteriorated by 29.76 percent in 9MFY26 due to lower income from investment in mutual funds.

LCI posted 20.46 percent thinner operating profit in 9MFY26 with OP margin clocking in at 14.59 percent versus OP margin of 17 percent recorded in 9MFY26. Finance cost dipped by 1.67 percent in 9MFY26 due to reduction in discount rate.

The company also recorded exchange loss of Rs.39.66 million in 9MFY26, up 36.11 percent year-on-year. Net profit plunged by 24.58 percent to clock in at Rs.6693.811 million in 9MFY26. This translated into EPS of Rs.14.50 in 9MFY26 versus EPS of Rs.19.22 registered in 9MFY25. NP margin tapered from 9.64 percent in 9MFY25 to 7.83 percent in 9MFY26.

Future Outlook

The company will continue to leverage on its well diversified business portfolio, operational efficiency and strong balance sheet.

LCI keeps on undertaking expansions within and outside the country and identify new revenue streams which will enable it to register robust financial performance in the future. Commissioning of animal health plant in Sheikhupura and a wholly owned subsidiary in the Jebel Ali Free Zone will add further depth to the company’s sales mix and facilitate future investments.

On the flipside, tension in the Middle East and the subsequent spike in the crude oil prices will translate into weaker industrial activity. Besides, tariff rationalization has eased the low-cost import which has intensified competitive pressure on the local industry.