Cement local demand posts stellar growth

Lahore - Cement local demand, which has registered a rise of 9 per cent in 7MFY15, continues to post stellar growth on the back of the initiation of mega projects announced by the new govt.
According to experts, higher than expected local sales growth, sustainable pricing arrangement and lower input costs are key variables that will drive bottom-line growth of cement manufacturers in their results. They said that FY15 started on a positive note for Pakistan cement sector as everything going in favor from falling international oil and coal prices to monetary easing by the Central Bank. According to industry sources, Maple Leaf (MLCF) and Kohat Cement (KOHC) have announced their 1HFY15 results and posted earnings of Rs1.4b, down 3 per cent, and Rs1.3m, down 7 per cent, respectively. However, on quarterly comparison, MLCF’s earnings grew by 63 per cent in 2QFY15 to Rs888m compared to Rs545m in 1QFY15. Moreover, KOHC due to a brief ban by the local court on the excavation of minerals, witnessed lower dispatches, due to which, earnings remained flat at Rs683m on quarterly basis that is now recovering. Other major cement producers will soon be announcing their Dec 2014 quarter ended results. Experts said that with economic recovery in Pakistan, it is expected that average GDP to grow at 4.5-5.5 per cent in next 3 years, which could lift local cement sales by 9 per cent on average annually to reach 34.1m tons per annum by FY17 and exports to 8m tons per annum. At that time, capacity utilization level of the industry will reach 94 per cent.

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