Lucky Cement Limited has announced its financial results for the nine months that ended on 31 March 2021.
The company reported a consolidated highest ever profit after tax of Rs. 22.15 billion, up by 290% or 2.9x compared to Rs. 5.68 billion during the same period last year. This translates into earnings per share (EPS) of Rs. 56.36/share as compared to Rs. 14.38/share reported during the same period last year.
Further, on a consolidated basis, the Company achieved a gross turnover of Rs. 202.46 billion which is 63% higher as compared to the same period last year’s turnover of Rs. 123.99 billion. During the 9M 2020-21 under review, the Company’s consolidated net profit (attributable to owners of the Holding Company) increased by 292% as compared to the same period last year.
According to a statement released by the company, the increase in profit was mainly attributable to an increase in profitability of the Cement segment (Holding Company) which grew by 3 times due to higher turnover and better efficiencies from the new line at North.
Lucky Motor Corporation (Formely Kia Lucky)
The increase in the consolidated profit was further supported by a considerable increase in Profit of Lucky Motor Corporation, which reported a revenue of 3.5 times the revenue of the corresponding period. Lucky Motors posted gross margins of 15.6%. According to Topline Securities, the auto business posted a profit in between Rs. 3 billion to Rs. 3.5 billion in the 3QFY21 alone.
The other subsidiaries, ICI Pakistan Limited and LCL Investment Holdings Limited also posted a significant increase in profitability mainly attributable to growth in sales revenue.
On a standalone basis Company’s overall sales volumes posted a high double-digit growth of 31.1% to reach 7.61 million tons during 9M 2020-21. The local sales volumes grew by 38.8% to reach 5.71 million tons in comparison to 4.11 million tons during the same period last year. Also, the export sales volumes of the Company increased by 12.3% to 1.90 million tons as compared to 1.69 million tons during the same period last year.
The increase in Company’s local sales volume during the period under review is mainly due to the availability of new capacity in Pezu and significant growth in the Cement demand triggered by an upsurge in economic activities, especially in the North. Moreover, growth in export sales volume is mainly due to higher exports of loose cement owing to effective push by the Company, keeping in view the better margins and its unique position to make such sales.
Standalone Financial Performance
Further, with regards to Company’s standalone financial performance, the gross sales revenue increased by 37.9% to Rs. 66.13 billion compared to Rs. 47.95 billion reported during the same period last year. The per ton cost of sales also decreased mainly due to better absorption of fixed cost as a result of an increase in volumes and efficiencies achieved from the new production line in the North.
Lucky Cement recorded a net profit after tax of Rs. 11.69 billion. Similarly, the standalone EPS of the Company is Rs. 36.14/share as compared to the same period last year’s reported EPS of Rs. 9.08/share.
The Company reported progress on its brownfield plant expansion activities in KPK with project completion targeted for December 2022. Further, the Greenfield cement production facility in Samawah, Iraq successfully completed its trial production and commenced commercial operations from March 2021.
The Company also reported that its 1 X 660 MW supercritical coal-based power project at Port Qasim has achieved a completion status of approximately 97.5% by end of this quarter. Based on the current level of readiness by NTDC for providing an interconnection facility and the Government’s support, it appears that the project would achieve its Commercial Operation by mid of first-quarter FY 2022 (July to September, 2021).
Lucky Cement expects that in view of the hike in infection ratio from the third wave of Covid-19, if the Government imposes micro/smart lock-downs in major cities, then the cement demand will be affected in the short term. The Company also believes that the package announced by the Federal Government for the construction industry coupled with various initiatives taken by the State Bank of Pakistan to support the housing sector and the commencement of new housing projects under the Naya Pakistan Housing (NPHP) scheme will have a positive impact on the local demand of cement in the country in the medium to long term.
New FDI inflows are also expected in CPEC projects, which will result in increased cement demand. The Company also showed its concern that there will be pressure on margins due to rising coal and furnace oil prices.