Kohat Cement is installing a new 10MW solar plant to supplement its existing 10MW solar capacity

Kohat Cement Company Limited (KOHC) held its corporate briefing today to discuss the financial results of FY24 & 1QFY25 and its future outlook.

Key highlights of the briefing are as follows:

Management noted that reducing policy rates could lower interest expenses, saving the government billions. However, these savings are likely to bridge gaps in government revenue, which may limit allocations to the Public Sector Development Program (PSDP) and restrict infrastructure spending.
Local demand is expected to decline by 5% in FY25, significantly improving from the 15% decline seen in the first four months of FY25.
The current market retail price (MRP) for cement ranges from PkR 1,430 to PkR 1,435 per bag, leading to retention prices exceeding PkR 850 per bag.
The company exports cement to Afghanistan, but the retention price is lower than in the local market, covering only the variable costs.
In KPK, the royalty is around PkR 250 per ton, while Punjab recently increased its royalty from PkR 400 per ton to 6% of the cement’s ex-factory price. This change has led to a difference of over PkR 1,000 per ton in royalty charges between the two regions.
In FY24, KOHC sourced 44% of its power from the grid and 56% from in-house generation (WHR, solar, and FO). In 1QFY25, the company relied on the grid for 34% of its energy needs, with the remaining requirements met through in-house power generation.
According to management, the company is pursuing cost efficiencies, as it has no control over pricing and cement demand. To support these efforts, the company is installing a new 10MW solar plant to supplement its existing 10MW solar capacity. Additionally, a 6MW installation is expected to be completed by the end of 2QFY25. The current grid rate is approximately PkR 40/KWh.
The company is also establishing a 30MW coal-fired power plant with a capex of PkR 11bn and aims for commissioning within 18 months.
In FY24, the company used 73% imported coal and 27% local coal. In 1QFY25, imported coal usage decreased to 69%, with the remaining demand met by local coal. The average coal price was PkR 44k per ton in FY24 and PkR 42k per ton in 1QFY25.
The price of local coal ranges from PkR 35k to PkR 37k per ton. The company uses ~50% local coal (Darra) in its fuel mix.
Recent reductions in Afghan duties and border taxes are expected to lower prices by PkR 3k-4k per ton.
According to management, the company has cash reserves of PkR 25bn, the majority of which is invested in mutual funds. They also mentioned that the reduction in interest rates is likely to decrease other income.
To recall, KOHC Cement Company Limited reported its highest-ever earnings of PkR 3,439mn (EPS: PkR 17.56) in 1QFY25, up 54% year over year and 44% quarter over quarter.