· Lucky Cement Limited (LUCK) announced 1QFY22 result where the company posted unconsolidated PAT of PkR3.3bn (EPS: PkR10.2), up 48/38% YoY/QoQ. The result was significantly above our expectations as significant deviation occurred in net sales where we believe lower than expected discounts played a part.

· Net sales clocked in at PkR16.9bn for 1QFY22, increasing by 18%YoY as overall local dispatches for the industry increased by 4.1%YoY however sequential increase in topline was witnessed despite a decrease in local dispatches as retail prices of cement improved.

· Gross margins clocked in at 27% against 28/27% for 1QFY21/4QFY21 where flattish performance on sequential basis despite improvement in prices was a consequence of increase in coal prices which have increased by 89.5% since Dec’20 and currently trade around USD165/ton.

· Distribution expenses decreased by 26%YoY where we believe decline in exports was the main reason as increase in coal prices have decreased the margin on clinker exports significantly. Administrative expenses on the other hand increased by 19/11% YoY/QoQ.

· Company also apprised on the ongoing projects where completion of 3.15mn tons expansion at Pezu is slated at Dec’22 while a commission date of LEPL has also been provided at Dec’21-end where the irritants disrupting the interconnection have been removed with the help of government.

Courtesy – AKD Research