Lucky Cement posts record Rs36.42 billion profit

Lucky Cement posts record Rs36.42 billion profit

KARACHI: Lucky Cement on Friday, August 06, 2022 posts record Rs36.42 billion annual profit after tax (PAT) for the year ended June 30, 2022, from which Rs6.93 billion is attributable for the non-controlling interest.

The earnings per share (EPS) are of Rs91.22 per share as compared to Rs70.69 per share reported last year.

The company achieved 60 per cent higher net turnover of Rs331.5 billion as compared to last year’s turnover of Rs207.2 billion.

The consolidated net profit of the company remained Rs36.4 billion out of which Rs29.5 billion was attributable to the owners of the holding company, compared to Rs28.2 billion and Rs22.9 billion, respectively for the prior year.

The EPS was of Rs91.22 during the fiscal year ended June 30, 2022 as compared to Rs70.69 during last year, representing a growth of 29 per cent.

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The exceptional growth in revenue, despite economic challenges is owing to robust performance across all businesses of the group and is an affirmation of the successful execution of the Group’s diversification strategy.

On a standalone basis the Company’s overall sales volumes declined by 8.9 per cent to reach 9.1 million tons during the year ended June 30, 2022 in comparison to 10 million tons last year.

Local sales volume dropped by 3.6 per cent to reach 7.3 million tons in the current year compared to 7.6 million tons last year. While the export sales volume declined substantially by 25 per cent to 1.8 million tons during the year compared to 2.4 million tons during last year due to non-viability in terms of pricing on the back of persistent high coal prices in the international market coupled with increased shipping freights.

Despite the reduction in volumes in both domestic and export sales, the profitability of the local cement operations improved marginally because of enhanced operational efficiencies, including better management of sales and distribution costs, which decreased as a percentage of sales.

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The company achieved a major milestone when its wholly owned subsidiary, Lucky Electric Power Company Limited (LEPCL), achieved the Commercial Operations Date (COD) on March 21, 2022 of the 660 MW coal-fired power plant set up at Port Bin Qasim, Karachi.

This milestone will play a key role in increasing the energy security and prosperity of Pakistan. It will also go on to reduce the cost of electricity and reliance on imported fuel in the long run after the completion of Phase III of SECMC in June 2023.

The power generated from the plant is being fed into the national grid in line with a power purchase agreement signed with the Government. In another major development, the company’s subsidiary, Lucky Motor Corporation started assembling Samsung mobile phones in Pakistan in December, 2021.

Lucky Cement remains committed towards making a real contribution to the society and the communities in which it operates. The company extended its merit-based support to deserving and less privileged students in Pakistan and abroad.

The company also continued to donate generously towards health-based initiatives by supporting various welfare organizations. In support of the UN Sustainability Development Goals, the company has initiated and promoted various sustainable projects to support the United Nations’ 2030 Agenda.

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Regarding the future outlook, the company has reported that it expects fiscal year 2023 to be challenging for Pakistan’s economy, especially due to high current account deficit, which stood at $17.4 billion for fiscal year 2022 versus $2.8 Billion for fiscal year 2021.

The ongoing political instability has deteriorated the economic position of the Country and resumption of foreign exchange inflows from the International Monetary Fund (IMF) program has faced serious delays.

The IMF staff level agreement has now been signed and as per Government statements majority of conditions have been met and it expects the program to resume post approval from the IMF Board towards end of August 2022.

The resumption of the IMF program will not only reduce uncertainty but also open avenues for borrowing from other sources, which could help stabilize the foreign reserves and the domestic economic situation. Apart from this, certainty in the political landscape of the Country is needed so that long term and sustainable measures are taken for enhancing the exports and ultimately reducing the current account deficit of Pakistan.

The commodity super cycle, which started last year post-pandemic, continues to persist. This has been further aggravated by the ongoing Russia-Ukraine conflict resulting in continuous volatility in commodity prices particularly coal, petroleum products and packaging material, which has significantly increased the cost of production for cement.

A similar trend has been witnessed in other construction materials as well, mainly steel which has resulted in a hike in overall construction costs. On the local front, rising interest rates coupled with higher inflation have severely affected the purchasing power which will impact the cement demand in the short term.