FLASHNEWS:

Lucky Cement Reports Slight Earnings Decline in First Quarter Amid Cost Challenges

Karachi: Lucky Cement Ltd. (LUCK) has released its financial results for the first quarter of FY25, showing a marginal 5% year-on-year decline in standalone earnings to PkR6.6 billion, with earnings per share (EPS) falling to PkR22.4 from PkR23.6. The results, however, still surpassed expectations due to lower costs and higher other income.

According to AKD Securities Limited, the company's revenue saw a slight increase of 1% year-on-year to PkR29.8 billion, driven by higher retention prices which helped mitigate the impact of a growing share of exports in its sales mix 37% in the first quarter of FY25, up from 17% the previous year. Despite the increased focus on exports, total sales volumes remained stable year-on-year at 2.18 million tons.

The contraction in gross margins to 32.9% from 36.9% in the same period last year was primarily due to changes in the sales mix and higher coal prices, which have affected cost structures across the industry. Operating expenses saw a significant increase of 33% year-on-year, totaling PkR2.9 billion, largely due to higher distribution costs associated with the surge in exports.

Other income for Lucky Cement grew by 25% year-on-year to PkR3.9 billion, bolstered by a 42% increase in short-term investments, which climbed to PkR36.2 billion from PkR25.4 billion in 1QFY24. On a consolidated basis, Lucky Cement reported a slight increase in earnings by 1% year-on-year to PkR17.9 billion, with EPS at PkR61.2, compared to PkR17.7 billion and EPS of PkR60.4 in the previous year. The core cement operations' lower earnings were offset by stronger performance from Lucky Motors Corporation (LMC).

AKD Securities maintains a ‘BUY’ stance on LUCK, with a target price of PkR1,172 per share by June 2025, indicating a potential upside of 28%.