Karachi: Cherat Cement Company Ltd. (CHCC) recently conducted an analyst briefing to discuss its financial results for FY24 and 1QFY25, along with its future outlook.

According to AKD Securities Limited, the company posted its highest-ever profit of PkR5.5 billion (EPS: PkR28.3) in FY24, marking a 25% increase compared to PkR4.4 billion (EPS: PkR22.7) in the same period last year. This rise was primarily due to higher local retention prices, a decline in fuel costs due to an optimized coal mix, and reduced financial charges.

Despite a 12.5% year-on-year decline in local dispatches to 2.2 million tons from 2.5 million tons, CHCC’s exports remained robust, reaching 0.4 million tons compared to 0.3 million tons in the corresponding period last year. This resulted in an overall decline in total offtakes by 8.5% year-on-year. Local retention prices rose by 15% year-on-year to PkR755 per bag, compared to PkR658 per bag previously, while export prices remained stable at PkR600 per bag.

The shift in coal mix for FY24, which was 59.3% local, 22.2% Afghan, and 18.5% imported, from the previous year’s 5% local, 89.9% Afghan, and 5.1% pet coke, led to a 10% year-on-year decline in fuel and power costs to PkR6,176 per ton. This was despite rising power costs. CHCC benefits from slightly lower coal prices than its competitors due to its plant’s proximity to the Afghan border and the Darra coal field, with an average coal price in FY24 of PkR36-37k per ton.

For FY24, the power mix consisted of 49.9% gas, 37.2% waste heat recovery (WHR), 8.6% solar, and 3.7% from the Pakhtunkhwa Energy Development Organization (PEDO), with the rest on grid and furnace oil. The company expects to commission a 9MW solar capacity in 3QFY25, which will increase its total solar capacity to 22.6MW and shift an additional 3-4% of its power reliance to solar.

During 1QFY24, CHCC achieved its highest-ever quarterly earnings of PkR3.5 billion (EPS: PkR14.8), an 88% year-on-year increase from PkR1.5 billion (EPS: PkR7.9). This surge in profit was attributed to improved gross margins driven by higher retention prices and a lower effective tax rate, following a PkR720 million tax reversal due to a Supreme Court ruling.

The current market retail price of cement is approximately PkR1,450 per bag, while retention prices are around PkR900 per bag. CHCC has repaid most of its debt, leaving only concessionary loans on the books. The management anticipates an improvement in local cement sales in the coming months but expects a single-digit decline for FY25.