KARACHI: The Pakistan Credit Rating Agency Limited (PACRA) has maintained the entity ratings of Kohat Cement Company Limited (KCCL), highlighting its operational resilience in a competitive cement industry. Despite a challenging market, KCCL has successfully navigated through disciplined cost management and effective plant utilization.
The cement industry, faced with a decline in local sales, witnessed a 2.3% increase in total dispatches to 46.9 million tons, driven by a 29.5% surge in exports. In the first quarter of FY25-26, local dispatches grew by 17.7% and exports by 20.8%, marking an overall growth of 18.3%. This signals a recovery in construction activity.
KCCL reported a decline in dispatches to 2.328 million metric tons in FY25 from 2.585 million metric tons in FY24. However, the first quarter of FY26 showed recovery with dispatches rising to 702,887 metric tons, an 18.8% increase from the same period in the previous year. Local dispatches saw a 12.7% growth, spurred by domestic market trends.
Net revenues for FY25 were approximately PKR 37,536 million, a decrease from PKR 38,648 million in FY24 due to a reduction in market share. Despite lower revenues, cost optimization improved the Gross Profit Margin to 39.2% from 29.1% in the prior year. The Net Profit Margin rose to 30.8%, aided by supplementary income from investments.
The first quarter of FY26 experienced a slight decline in gross margins due to competitive pricing pressures, and a 2.0% drop in net revenues compared to the same period last year. Development at the Khushab greenfield site continues, with plans for plant and machinery import tied to domestic demand recovery.
KCCL expanded its renewable energy portfolio by commissioning a 7.66MW solar project, raising total solar capacity to 17.66MW with a 20MW target. A 28.5MW coal-fired power plant at the Kohat facility is under construction, expected to cut power costs significantly when operational next year.
The company maintains a solid financial profile, supported by low leverage and healthy coverage ratios. A share buy-back of 12 million shares was completed in April 2025, followed by a 5:1 stock split in August 2025 to improve share liquidity and investor participation.
KCCL's ratings reflect its ability to sustain market share, maintain margins, and optimize capacity utilization. The recovery in domestic cement demand is expected to support volume stability, while macroeconomic improvements and a positive construction outlook should bolster sector performance. Nonetheless, the company faces near-term pricing pressures from excess industry capacity and competitive dynamics. Its focus on operational efficiency and export diversification remains crucial for maintaining profitability and ratings.