The 2QFY26 financial results of 15 listed cement companies reflected strong profitability, driven by higher local dispatches, improved margins, and lower finance costs. The sector reported a cumulative PAT of PKR 34,817 million, up 0.2% YoY but down 6% QoQ. Net sales stood at PKR 198,236 million, up 7% QoQ and 1% YoY, driven by a 5.7% QoQ increase in total dispatches and improved retention prices.

·         Gross margins stood at 31.2%, up 1.3ppt QoQ but down 1.8ppt YoY. The YoY decline was mainly due to higher coal costs following the reduced availability of Afghan coal, which increased inland freight to PKR 13,000–15,000/ton. The weighted average electricity cost during 2QFY26 stood at PKR 33–33.5/kWh under the subsidized power scheme.

·         Coal prices averaged USD 85.60/ton in 2QFY26, down 1.92% QoQ from USD 87.28/ton in 1QFY26 and down 20.49% YoY from USD 110.44/ton in 2QFY25.

·         Other Income was down 38% QoQ and 8% YoY, mainly due to lower interest income.

·         Finance costs were slashed by 47% YoY to PKR 3,969 million, attributed to lower interest rates.

·         Local dispatches reached 11.205 million tons in 2QFY26, showing an 11.64% YoY increase from 10.037 million tons in 2QFY25. Similarly, on a QoQ basis, dispatches increased by 13%, compared to 9.954 million tons in 1QFY26.

·         Export dispatches were down 21% QoQ and 23% YoY to 2.042 million tons. They fell sharply from 2.588 million tons in 1QFY26 and 2.667 million tons in 2QFY25.

Outlook

·         Going forward, the cement sector is expected to maintain stable profitability, supported by a gradual recovery in local demand and sustained dispatch volumes. Additionally, lower inflation, easing interest rates, and supportive government construction initiatives are likely to provide further impetus to the sector.

Courtesy – AL Habib Capital Markets (Pvt) Limited