Islamabad: In a remarkable financial turnaround, Pakistan's cement sector has reported a substantial 60% year-on-year increase in earnings for the fourth quarter of fiscal year 2025. The impressive growth is primarily attributed to improved retention prices and significantly lower finance costs.

Despite a flat sales trajectory on a quarter-on-quarter basis, the sector experienced a 5% year-on-year increase, reaching Rs167.8 billion. However, quarter-on-quarter revenue dipped due to a 6% decline in domestic dispatches, while export dispatches surged by 33% year-on-year, albeit declining by 55% from the previous quarter.

The sector's gross margins rose to 34% in the fourth quarter, bolstered by reduced coal prices and an efficient energy mix. The usage of Richards Bay coal in the southern region and a mix of Afghan and local coal in the northern region contributed to this financial upswing. Additionally, the incorporation of alternative fuels such as biomass has resulted in significant cost savings, further enhancing margins.

Lucky Cement (LUCK), Bestway Cement (BWCL), and Fauji Cement Company Limited (FCCL) played pivotal roles, contributing 52% to the sector's overall profitability. BWCL emerged as a key player, accounting for 20% of the sector's profits, followed by LUCK and FCCL with contributions of 19% and 13%, respectively.

Notably, the sector's finance costs plummeted by 50% year-on-year, thanks to monetary easing and balance sheet deleveraging. However, other income saw a drastic reduction, primarily due to the absence of dividends from Lucky Electric Power.

Looking ahead, the sector is poised for further profitability in the first quarter of fiscal year 2026, driven by robust domestic and export demand, falling coal prices, and an enhanced energy mix. The outlook remains optimistic, with key players like LUCK, FCCL, and Maple Leaf Cement positioned as top picks for continued growth.