ISLAMABAD, Lucky Cement Limited (LUCK) conducted its analyst briefing yesterday, shedding light on the company’s 1QFY24 results and providing insights into future expectations. The company revealed a substantial increase in its earnings, details about its energy projects, and anticipated market challenges.
According to AKD Securities Limited, Lucky Cement reported unconsolidated earnings of PkR22.1 per share for the first quarter, marking a 1.7 times quarter-on-quarter surge. This growth is credited to the removal of the super tax’s retrospective effect, improved gross margins, and an increase in other incomes compared to the fourth quarter of the previous fiscal year.
The management highlighted that the previous quarter’s improvement in gross margins resulted from procuring coal at favourable rates. However, with coal prices on the rise, this trend isn’t predicted to persist into the second quarter of FY24.
On a consolidated basis, the earnings escalated to PkR56.5 per share, a 50% quarter-on-quarter growth, powered by substantial earnings from LEPCL and enhanced profitability from international operations in Iraq and DR Congo. This growth stems from an intensified demand for cement and augmented retention prices.
LUCK’s share in the local cement market climbed to 17.5% in the first quarter of FY24, a jump from 14.8% in the same period last year. This surge is attributed to an added capacity of 3.15mn TPA. The company has also seen growth in exports, facilitated by the dip in coal prices.
With respect to coal utilization, the company chiefly relies on imported coal for its South plant while employing a blend of local and Afghan coal in the North plant. In the past quarter, the coal mixture was maintained at 60% imported and 40% local.
Presently, cement prices hover around PkR1,150 per bag in the north and just under PkR1,100 in the south. The management forecasts a 5% annual boost in cement sales for FY24.
LUCK is actively investing in renewable power ventures, encompassing solar and wind, totaling approximately 103MW. Out of these, 62MW of solar projects have been finalized, with an additional 6MW solar and 28.8MW wind projects underway. The total capital expenditure for these initiatives amounts to roughly PkR20bn, of which PkR8.0bn has already been spent.
The management expects some challenges ahead, anticipating a drop in profitability for local cement operations and the auto segment due to rising costs and demand obstacles. Nonetheless, the chemical segment, power, and overseas operations are projected to maintain their current performance levels.
Addressing power concerns, the management of LEPCL cited a delay of 3-3.5 months in receivables. However, they remain optimistic that the ongoing reforms in the energy sector will alleviate the circular debt issue and have set a goal to sustain a 100% availability factor in the future.
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