Mansoor Sadiq

Pakistan’s cement industry performed well despite confronting multiple challenges during the current fiscal year. The cement sector recorded a contraction of 16.82% on year-over-year (YoY) basis during November 2022. The cement industry witnessed disrupted sales during the first five months (July-November) of the fiscal year 2022-23 on account of multiple factors, including raised fuel prices, economic recession, floods, soaring interest rates and subsequent depreciation of Pak rupee.

Cement industry during the last four years withstood the lockdown challenge of the Covid-19 pandemic, and witnessed an impressive growth during the fiscal year 2020-21. After meeting rising domestic requirements, the cement industry in Pakistan also managed to export cement to Afghanistan, Oman, Qatar and other regional countries, including Sri Lanka and Bangladesh.

The expanding construction industry in Pakistan has created a vast consumption, raising the prices to Rs1,000-1200/50kg bag. As per the data of All Pakistan Cement Manufacturers Association of (APCMA), the ratio of cement dispatches for November 2022 reduced to 4.009mt contrary to 4.820mt for the corresponding month of 2021.

Mian Muhammad Kashif, Member, said while talking to WealthPK that Pakistan’s cement sector comprises 19 manufacturing companies, of which 16 are operational. Pakistan’s cement sector is mainly divided into two regions: North and South, where the north region covers the area of Punjab, Khyber Pakhtunkhwa and Azad Jammu and Kashmir (AJK), while the south region covers Sindh and Balochistan provinces.

As per market capital ratio, the leading cement companies are listed as Lucky Cement with Rs158.74 billion capital, BWCL with Rs79.24 billion, FCCL Rs31.74 billion, KCCL Rs32 billion, MLCCL Rs28.53 billion, CHCC Rs24 billion, and DGKC Rs23 billion. All these major companies are considered as bigger cement units as their market capital is above Rs20 billion.

Three companies, including BWCL, CHCC and DGKC, gave dividends of 12.27%, 2.6% and 1.65%, respectively. Lucky Cement annual sales were recorded at Rs81.09 billion, BWCL Rs72.35 billion, FCCL Rs54.24 billion, KCCL Rs32.87 billion, MLCF Rs48.52 billion, CHCC Rs32.08 billion, and DGKC Rs58. 04 billion.

On the basis of these sales, the annual net profit of Lucky Cement was Rs15.29 billion, BWCL Rs10.24 billion, FCCL Rs7.11 billion, Kohat Cement Rs5.01 billion, MLCF 3.62 billion, CHCC 4.45 billion, and DGKC 2.97 billion. Syed Mazhar Iqbal, another Member APCMA, told WealthPK that the cost of production in cement manufacturing during the last two years has increased almost 50% following the rising prices of coal, electricity and petroleum, and subsequently the prices of cement have also witnessed an increase which has affected consumption.

He said Bangladesh and Sri Lanka are two vital markets for Pakistan’s cement, but both are facing foreign exchange issues, and subsequently Pakistan’s cement exports to these two destinations have reduced significantly, impacting the exports’ overall volume and capacity.

The APCMA member said the State Bank of Pakistan must allow the opening of letters of credit for renewable energy projects needed to reduce energy costs. He said construction related sector is allied with 40 industries, and it must be strengthened for the promotion of development activities.

Credit : Independent News Pakistan-WealthPk