KARACHI: Pakistan's cement sector reported a 23% year-on-year increase in earnings for the fourth quarter of fiscal year 2026, reaching Rs38.41 billion. The rise in profits was driven by improved retention prices and a lower effective tax rate, along with a 12% increase from the previous quarter. For the entire fiscal year 2026, the sector's profitability grew by 13% to Rs143 billion.
According to JS Global, the sector's net sales increased by 9% year-on-year and 3% quarter-on-quarter, totaling Rs179.3 billion in the fourth quarter. This growth was largely attributed to higher domestic dispatches. Over the fiscal year, net sales rose by 8% to Rs715.4 billion. Domestic dispatches saw a 7% year-on-year increase to 9.9 million tons, while export volumes fell by 22% to 2 million tons in the fourth quarter. Despite the decline in exports, domestic dispatches over the full year increased by 10% to 41.5 million tons, with an overall sector utilization rate of 60% for the year, up from the 53-56% range in previous years.
The report highlighted that average cement bag prices increased in both the North and South regions, contributing to stable gross margins of 33.7% for the sector in the fourth quarter. The sector also benefited from a reduced finance cost of Rs19.5 billion for the year, down 32% from the previous year due to lower borrowing costs. The effective tax rate for the sector decreased to 25.1% in the fourth quarter, following a reduction in super tax rates which contributed to lowering the overall tax rate.
Key contributors to the sector's profitability included LUCK, BWCL, and FCCL, which collectively accounted for 60% of the total profits in the fourth quarter. LUCK emerged as the top performer, with a 72% year-on-year increase in profit after tax, due to higher sales and a lower effective tax rate. BWCL's and FCCL's profits also saw significant increases, driven by higher income from other sources and reduced finance costs.
The report noted that Richards Bay coal prices increased by 26% year-on-year and 14% quarter-on-quarter, affecting cost dynamics. However, other income for the sector declined by 15% quarter-on-quarter but increased by 24% year-on-year in the fourth quarter. The analysis excluded results from Thatta Cement, Flying Cement, and Dewan Cement due to pending announcements.