Lahore, Earnings projections for several major cement companies in Pakistan suggest a broad decline in the third quarter of the fiscal year 2024 (3QFY24), primarily due to lower dispatches and other factors impacting margins and profitability.
According to JS Global, companies such as Lucky Cement (LUCK), Pioneer Cement (PIOC), Cherat Cement (CHCC), Attock Cement Pakistan Ltd (ACPL), Kohat Cement (KOHC), and Maple Leaf Cement (MLCF) are expected to report declines in earnings due to reduced local dispatches. Despite earlier retail price increases to offset the impact of axle load, companies are expected to see disproportionate retention prices.
LUCK is scheduled to announce its 3QFY24 earnings on April 26, with projections indicating a net profit after tax (NPAT) of PKR 19.4 per share, down from PKR 23.1 in the previous quarter. The decrease is largely due to lower dispatches and a decline in gross margins. The company's topline is expected to fall by 7% to PKR 28.2 billion. At the consolidated level, LUCK's 3QFY24 earnings are expected to be PKR 51.6 per share, a 14% decrease compared to the previous quarter.
PIOC is also expected to report a significant drop in 3QFY24 earnings, with projections indicating an NPAT of PKR 1,342 million, translating to an earnings per share (EPS) of PKR 5.9, representing a 21% decrease. This decline is attributed to reduced gross margins and lower dispatches. PIOC's topline is expected to decline by 15% to PKR 8.6 billion.
Similarly, CHCC's expected 3QFY24 earnings suggest an EPS of PKR 6.02, a 37% decrease due to higher gas prices and a 15% decline in the topline. Gross margins are expected to drop by 4.3 percentage points.
ACPL's projections show a 30% decrease in EPS to PKR 2.55. However, the company is anticipated to have improved gross margins due to lower export contributions and better coal cost management.
KOHC is expected to report 3QFY24 earnings with a 9% decrease, resulting in an EPS of PKR 10.3. The drop is largely attributed to lower dispatches and a decrease in topline revenue by 18% to PKR 8.5 billion.
MLCF's earnings projections for 3QFY24 indicate a 13% decrease, with an EPS of PKR 1.5. The decline is due to lower dispatches, resulting in a 14% decline in topline revenue to PKR 15.46 billion. Gross margins are expected to remain flat.
Overall, these forecasts suggest that the cement sector may face challenges due to reduced local dispatches, increased gas prices, and shifts in cost structures, affecting profitability in the 3QFY24 period.