Pioneer Cement planned expansion size is 2.5mn tons

IMS Research has covered Pioneer Cement (PIOC) FY25 Analyst briefing and released following takeaways: PIOC held its corporate briefing session recently to review its operational and financial performance for FY25. The company reported EPS of PKR21.47 for the year, down 6% YoY. The decline in profitability is attributed to a substantial jump in raw material costs to PKR1,860/ton (up 2.2x YoY) and a 12% decline in volumes.

Domestic sales were recorded at 2.07mn MT, reflecting a c.12% YoY decline, underperforming the total 2.5% YoY decline in domestic North sales. Management previously stated that the company’s strategy was to maximize EBITDA per ton and focus only on high-retention markets. This approach resulted in sales below its capacity-based market share, accounting for 6.7% of North sales in FY25 despite having 7.5% of capacity market share. However, the company now expects to regain market share, noting that while the industry grew by 18% in 4MFY25, the company’s sales grew by 21%

Management expects the demand outlook to remain robust, with expectations of 6–8% growth on the low end and the possibility for the year to close in the double-digit growth range.

Retention prices currently stand at PKR15,450/ton following the recent price hikes.

Fuel and Power:

The fuel mix in FY25 stood at 10% imported coal, 65% local coal, and 25% blended coal. With the Afghan border closure, management stated that they have shifted to imported coal, with the weighted average cost of inventory standing at c.PKR40,000/ton.

§ On the power front, management stated that the power mix currently stands at 25% WHR, 70% coal power plant, and 5% grid, with the weighted average cost per unit in the range of PKR19–20/kWh

§ PIOC’s coal-fired boilers have a higher capacity to utilize local coal compared to competitors, which helps reduce power costs.

§ Management stated that they aim to maintain minimal reliance on the grid and will continue investing in efficiency-improving projects such as solar power as capacity utilization increases.

Other Items:

oyalty on raw materials was recorded at PKR1,400/ton in 1QFY26. Management guided that the next court hearing on the royalty issue between Punjab-based producers and the Punjab government is scheduled for November 12.

In terms of capital allocation, the company stated that it will continue to distribute dividends; however, if utilization levels improve sufficiently, it may opt to expand capacity to gain market share. The planned expansion size is 2.5mn tons, with an estimated project cost of US$175–225mn. Alternatively, the company may consider investing in other sectors related to construction.