Topline Securities hosted Pakistan Pharma Invest 2024, the third session of which was Lucky Core Industries (LCI) Limited. Mr. Atif Aboobukar, LCI’s CFO, spoke at the session.
Regarding the pharmaceutical business, management communicated that 70% of the current portfolio is non-essential. After the addition of Pfizer’s portfolio, the non-essential component will increase to 80% since almost all of Pfizer’s brands are non-essential except for one which has a lower revenue share.
Pfizer’s acquisition is expected to conclude next month, i.e., Sep 2024, and the Competition Commission of Pakistan already approved it on August 4, 2024. The company acquired 7 brands of Pfizer. LCI has also acquired a manufacturing facility capable of producing 6 dosage forms, Tablets, Capsules, etc and 4 types of packaging capabilities.
In FY24, LCI revenue from the pharma business was Rs12.2bn. Pfizer’s acquisition will add an extra Rs6bn to the top line.
At the start of FY24, the company increased non-essential drug prices by ~20%, and after the court decision on deregulation, prices were increased again in April-May 2024. The increase in essential drugs was lower compared to non-essential drugs in FY24, as was in line with DRAP policy.
Regulatory approvals have been granted to the company for a greenfield veterinary medicine manufacturing facility. The cost of the project would be Rs723mn. Civil work on the project has commenced, and the expected operational date is FY26. Vet medicines have 60-70% localization, which is why LCI is entering the business.
The current capacity of soda ash is 560k tons per annum. 200k tons expansion of soda ash is expected to be completed in 2-3 years with a close eye on the demand situation in the economy. The project is currently in the design phase, which will take 1 year, and after that, construction will take 1-2 years.
LCI plans to add a 1,200-ton capacity of masterbatches, colour additives for plastics and part of the company’s chemicals and agri segment.
Sales volumes of the soda ash segment have increased by 13% YoY to 549k tons. Record export sales of 150k tons have supported volumetric sales. Domestic soda ash market has decreased to 590k tons in FY24 compared to 610k tons in FY23. The total industry capacity of soda ash is 910k tons, with LCI at 560k tons.
Polyester segment volumes decreased by 10% year over year to 102k tons in FY24. This was due to the abysmal state of the textile sector, which is impacted by high energy costs.
Regarding the float glass project with Tariq Glass, management communicated that it had been delayed due to the economy’s state, where glass furnaces are closed. However, LCI is committed to doing this project once the situation normalizes.
According to management, the LOTCHEM acquisition was not completed due to the expiry of the timeline, and there is no plan as of now to re-pursue this transaction.
LCI plans to continue a 50% dividend payout ratio from its continuing operations.
