Karachi: The Pakistan cement sector is projected to see a 7% year-on-year decline in profitability for the third quarter of fiscal year 2026, according to projections released by JS Global. The decline, from Rs22.8 billion in the previous year to Rs21.1 billion, is attributed mainly to the absence of dividend income from Lucky Electric Company (LEPCL).
According to JS Global, the sector's earnings on a quarter-on-quarter basis are expected to fall by 4%, influenced by rising coal prices amid ongoing geopolitical tensions and an 11% decline in local dispatches during the Ramadan and Eid holidays. Despite these challenges, net sales are anticipated to grow by 20% year-on-year and 3% quarter-on-quarter, reaching Rs111.1 billion, driven by a 9% increase in overall dispatches to 13.24 million tons.
Domestic dispatches increased by 4% year-on-year, while export dispatches rose by 35% over the same period. However, domestic dispatches saw an 11% sequential decline, with export dispatches climbing 14%. Cement prices experienced an increase of Rs30-60 per bag quarter-on-quarter, primarily due to higher fuel costs.
Capacity utilization for the sector decreased to 58% in 3QFY26 from 62% in the previous quarter, though it rose from 53% in the same quarter last year. Richards Bay coal prices averaged around US$100 per ton during the quarter, up from US$86 in the preceding quarter and US$96 in the same quarter last year, contributing to a decline in gross margins to 32%.
Highlighting corporate developments, Maple Leaf Cement Factory Limited acquired a 70% controlling stake in Pioneer Cement Limited during the quarter, enhancing its presence in the northern region. Other income for the sector is estimated to have fallen by 40% year-on-year to Rs7.95 billion, mainly due to the absence of LEPCL dividend income.
The press release further notes that if a Rs6 billion dividend from LEPCL is recorded, the sector's profitability could rise to Rs27.07 billion, marking a 19% year-on-year increase. Despite this potential, no payout from the cement sector is expected for the quarter.
In terms of individual company performance, Lucky Cement is projected to see a 29% year-on-year increase in consolidated earnings, while its unconsolidated earnings are expected to decline by 41% due to the absence of LEPCL dividends. Kohat Cement is likely to report a 7% year-on-year decline in earnings per share, driven by increased fuel and power costs. Conversely, Fauji Cement is expected to see a 98% year-on-year increase in earnings, supported by higher net sales and reduced finance costs. DG Khan Cement is projected to post a 56% year-on-year increase in earnings per share, though with a quarter-on-quarter decline. Maple Leaf Cement is anticipated to report a 26% year-on-year rise in earnings, aided by increased net sales following its acquisition of Pioneer Cement.