Pakistan’s manufacturing sector constitutes as the second largest sector of the country’s economy contributing 13.5 percent to GDP and generating biggest number of industrial career opportunities with technology transfer. In the manufacturing the role of All Pakistan Cement Manufacturers Association (APCMA) is unforgettable where the Association is continuously trying to upgrade the whole cement sector of Pakistan in the challenging economic environment. The Association calculated that though capacity utilization this July stood 87 percent as against to 61 percent previous year; it is not because of any so-called turnaround in exports. In fact, exports share in all dispatches declined from 20 percent to 14 percent in July 2017 YoY (year-on-year).
According to cement producers, they adjust their sales mix when they have to take a significant price cut in exporting markets. In Afghanistan, cheaper Iranian cement makes Pakistani cement much more expensive. In India, Pakistani exports had been growing to previous year due to the price cut of almost 15 percent Pakistani cement takes to sell to that market. In South Africa, a once prominent market for Pakistan imposed a 5-year anti dumping duty on Pakistani cement which they accused was being dumped into the country. Because of all these reasons, cement manufacturers have been cutting down on exports—simply not being competitive in their primary markets.
No doubt, the country is among the world’s fastest-growing construction markets and is predicted to grow an average 12 percent yearly for the next five years especially because of China-Pakistan Economic Corridor (CPEC) mega projects. The cement sector is aiming to even raise its capacity, riding a wave of Chinese-financed infrastructure projects across Pakistan.
On the other hand, market experts mentioned that the cement prices have presently fallen by Rs10-20 per 50 kg bag to an average of Rs550 from the level of Rs560-570 in northern parts of Pakistan due to multiple causes. However, prices in South region remain intact at an average of Rs580 per bag. Market experts also mentioned that the prices have come down because of low demand, as construction work, which is not in progress these days; however, the southern area where weather is normal the rate of the commodity is still high. The cement sector stakeholders have stressed the need for reduction in taxes and duties to bring down the prices of cement and facilitate consumers which will also assist industry to increase as it is playing a vital role in the development of Pakistan.
D. G. KHAN CEMENT COMPANY LIMITED
During nine months ended March 31, 2017, D. G. Khan’s clinker production grew by 12 percent. Cement production soared by 8 percent. The financial advisors of the company also mentioned in the report that the local dispatch growth hit 11 percent and exports fell by 9 percent. Clinker production utilization is 106 percent. Cement production utilization is 108 percent. With respect to rated capacity, cement dispatches stood 107 percent with domestic share of 93 percent and exports share of 14 percent. The domestic sales comprise of 87 percent of total sales while exports are 13 percent. The gross profit for nine months rose by 3.6 percent but for Q3 declined by 15 percent. Decrease in Q3 profitability is attributed to higher coal prices.
LUCKY CEMENT LIMITED
During the fiscal year 2016-17, Lucky Cement achieved profit before tax of Rs18,778 million as against to Rs18,400 million registered last year. Similarly, after tax profit of Rs13,692 million was achieved during the year under review as against to Rs12,944 million recorded previous year. The company’s financial experts mentioned in a statement that the earnings per share (EPS) of the company for the year closed June 30, 2017 was Rs42.34 as against to Rs40.03 recorded previous year. Lucky Cement offered for an amount of Rs5.03 billion on account of income taxes as against to Rs5.02 billion previous year.
MAPLE LEAF CEMENT FACTORY LIMITED
During the nine months closed March 31, 2017, Maple Leaf Cement registered net sales of Rs18,294 million as compared to Rs16,935 million in the same period last year chiefly because of quantitative growth in local sales mix. During the initial nine months of financial year, local dispatches rose from 1,979,465 metric tons to 2,199,641 metric tons as against to the same period, depicting a robust growth of 11.12 percent, YoY stemming from enhanced economic activity. This growth can be attributed to acceleration in private sector construction activities, partial materialization of PSDP and demand from CPEC related projects. Export sale volumes declined by 86,131 metric tons due to lackluster demand from overseas.
ANALYSIS OF CEMENT PRODUCTION CAPACITY & DESPATCHES IN PAKISTAN
July to June
% age Incr/
% age Incr/
% age Incr/
% age Incr/
Capacity Utilization % age
Surplus Capacity (Mn. Tones)
2017-2018 (1 Month)
THATTA CEMENT COMPANY LIMITED
During the year ended June 30, 2017, Thatta Cement’s capacity utilization of the plant during the year reached at 100.5 percent as against to 75.02 percent in the corresponding period last year.
The company’s financial experts mentioned that overall clinker production was higher by 34.03 percent as against to the previous year whereas cement production was higher by 13.40 percent than that of the last year.
The company’s cumulative dispatches recorded a substantial rise of 35.84 percent as against with the previous year because of increased capacity utilization and focused marketing activities to increase company’s share in the domestic market. In addition, 138,597 MT clinker was also sold. Current tax expense has grown by Rs259.66 million which includes one-time levy of Super Tax @3 percent amounting to Rs24.25 million.