Lahore: Gharibwal Cement Ltd (GWLC) revealed substantial financial growth in its FY24 results during an analyst briefing held yesterday, reporting a 41% increase in net earnings year-over-year, driven by a significant tax rate reduction. The company also detailed its strategies for reducing power costs and future expansions, despite a slight decline in cement dispatches.

According to AKD Securities Limited, Gharibwal Cement’s profit before tax grew by 4% year-over-year, but a drop in the annual effective tax rate from 55% to 38% notably boosted net earnings, reaching PKR 1.7 billion. However, the company experienced a slight decline in sales, down 1% to PKR 18.2 billion, attributed to an 11.6% decrease in cement dispatches over the year, though it maintained a 21% gross margin.

The company has strategically increased the share of local coal in its fuel mix to 31% from 20% in the previous year, reducing its average coal cost. Additionally, Gharibwal Cement is actively working to decrease its reliance on grid power by boosting its solar generation capacity from 12MW to 20MW by March 2025, with an estimated investment of PKR 550 million.

Further, the company is undergoing a significant upgrade with the replacement of its existing coolers with advanced coolers from FLSmidth, aiming to increase total capacity to 7.5k TPD from 6.7k TPD and reduce coal consumption by 3-4%. Despite a temporary shutdown of the clinker unit for this upgrade, the company has sufficient clinker inventory to meet demand.

Despite the challenges, management remains optimistic about cement demand, driven by an expected economic revival, although they currently are not pursuing exports due to lower margins, particularly in Afghanistan. Additionally, Gharibwal Cement’s plans for a new 10k TPD line are on hold, awaiting more favorable economic conditions, with the remaining project cost estimated at PKR 16-17 billion.