Cement sector to report core earnings of PkR 28.1bn: The BMA Cement Universe is expected to report core earnings of PKR 28.1bn in 2QFY26, representing an 8% YoY increase from PKR 26.0bn in 2QFY25, while declining 6% QoQ from PKR 30.1bn in 1QFY26. The YoY growth is primarily driven by higher earnings from GWLC, LUCK, and DGKC, as well as increased cement dispatches. In contrast, the QoQ decline is mainly attributable to lower earnings from LUCK, according to a BMA Research report.
Net sales are expected to decline by 1.8% YoY and up 5.0% QoQ: Net sales are expected to decline by 1.8% YoY but increase by 5.0% QoQ, reaching PKR 135.4 billion in 2QFY26. The YoY decline is primarily due to a 3% drop in cement prices and a 23% decrease in export volumes. However, the QoQ sales growth is driven by a 6% increase in total volume, led by a 12% rise in local cement dispatches.
Gross margin to settle at 35.7%: The sector’s gross margin is expected to improve by 1.6 ppts YoY, reaching 35.7% in 2QFY26, compared to 34.2% in 2QFY25 and 32.0% in 1QFY26. This improvement is driven by higher cement dispatches and lower coal prices. Cement prices for 1QFY26 are estimated at PKR 1,376 per bag in the North—down 6% YoY and 1% QoQ—and PKR 1,409 per bag in the South, down 1% YoY and 1% QoQ.
YoY decline in coal prices: During 2QFY26, cement producers in the South region primarily relied on Richards Bay coal, whereas those in the North region used a combination of Richards Bay coal, local coal, and alternate fuels. Richards Bay coal prices averaged USD 89.0 per ton during the quarter, marking a 19% YoY decline from USD 110.3 per ton and a 4% QoQ decrease from USD 92.5 per ton in 1QFY26.
Lower financial charges: The sector’s financial charges are expected to decline by 49% YoY to PkR 2.5bn. This decline is attributed to lower debt on the balance sheet, along with the reduced KIBOR.
Other income to drop to PkR 8.3bn: Other income of the sector is estimated to clock in at PkR 8.3bn in 2QFY26, down 6% YoY and 40% QoQ. LUCK is expected to contribute 48% in sector’s other income.
We have an Overweight stance on the Pakistan Cement sector with DG Khan Cement (DGKC), Fauji Cement (FCCL), Gharibwal Cement (GWLC) and Maple Leaf Cement (MLCF) as our top picks.
