Lahore: Lucky Cement posted standalone profitability of PkR6.6 billion (EPS: PkR22.4) in the first quarter of FY25, marking a 5% decline from PkR6.9 billion (EPS: PkR23.6) in the same period last year. This decrease is primarily attributed to a contraction in gross margin due to a higher export component in the sales mix. On a consolidated basis, however, earnings saw a slight increase of 1% year-on-year to PkR17.9 billion (EPS: PkR61.2) from PkR17.7 billion (EPS: PkR60.4) in the corresponding period of the previous year.
According to AKD Securities Limited, Lucky Cement's total offtakes rose by 1.8% year-on-year to 2.2 million tons in the first quarter of FY25, driven mainly by increased exports. Local offtakes declined by 23% to 1.4 million tons from 1.8 million tons in the same period last year, while exports surged by 117% year-on-year to 0.8 million tons from 0.4 million tons, raising the company's export market share to 38% from 22%.
In terms of coal usage, the company's South plant primarily relies on imported coal, and the North plant has also shifted towards imported coal, including Afghan coal. The weighted average coal cost for the quarter was PkR38k per ton. The management noted that a recent tax reduction on Afghan coal is expected to reduce its price by PkR5-6k per ton, with a delayed impact anticipated in the coming weeks.
During the quarter, local retention prices ranged between PkR15.5-16k per ton. Lucky Cement also successfully commissioned a 28.8MW wind power project at the South plant, which is expected to lower energy costs and enhance export competitiveness. Consequently, the company's renewable energy share, including WHR, solar, and wind, increased to 55% of its power mix.
Management reported that as exports are currently at a taxable loss, the company takes tax reversals on exports and offsets these against local sales to mitigate the partial impact of the increased export tax. However, due to low export numbers, the impact on the bottom line remains minimal.
Lucky Electric Power Company Ltd. maintained 100% availability during the quarter, although overdue receivables from CPPA-G stand at 4-5 months of sales. The company's foreign cement operations in Iraq and DR Congo continued to perform robustly, with all plants operating at over 90% capacity utilization and yielding strong margins.
Management expects a recovery in local cement demand driven by easing inflation and declining interest rates, which could mitigate a significant portion of the current 15% year-on-year fiscal year-to-date decline in offtakes. Additionally, volumes in the auto and mobile segments have begun to recover, with the chemical sector expected to follow broader economic growth and export trends.