AHCML Research has reviewed the financial results of different cement firms listed on the Pakistan Stock Exchange (PSX) for the periods of 2QFY2024-25 and 1HFY2024-25. According to the analyst, the 2QFY25 financial results of 15 listed cement companies reflected strong growth in profitability, driven by higher dispatches, improved margins, and lower finance costs. The sector reported a cumulative PAT of PKR 34.749bn, up 54% YoY and 46 percent QoQ.

Net sales stood at PKR196.657bn, up 21% QoQ and 2% YoY, driven by a 23% QoQ increase in total dispatches. Gross margins were recorded at 33 percent, up 3ppt QoQ and 5ppt YoY, primarily due to a reduction in international coal prices.

Coal prices averaged USD 110.44/ton in 2QFY25, compared to USD 116.15/ton in 2QFY24 (-4.91 per cent  YoY) and USD 110.02/ton in 1QFY25 (+0.38% QoQ).

Other Income rose 31% QoQ and 57% YoY, mainly driven by dividend income.

Finance cost slashed by 12% QoQ to PKR8463m attributed to lower interest rates.

The average discount rate during the quarter stood at 15 percent in 2QFY25, down from 22 percent in 2QFY24 and 18 percent in 1QFY25. This reflects a decline of 7% year over year and 3% quarter over quarter.

Local dispatches totalled 9,988K MT in 2QFY25, compared to 8,133K MT in 1QFY25, a 23% increase year over year.

Export dispatches stood at 2,667K MT in 2QFY25, up 24% yearly from 2,142 MT in 1QFY25.

Outlook:

AHCML Research concluded that we anticipate strong profitability for the cement sector in 2HFY25, driven by higher dispatches, improved local demand, lower inflation, lower interest rates, and the government’s new construction policy.