Home / This Week / Cover Stories / Cherat Cement To Produce 1,300,000 Tons Of Cement Thru Nowshera Plant: Records 50 Percent Profit In Q1; Join Hands With Chinese, Finland Firms

Cherat Cement To Produce 1,300,000 Tons Of Cement Thru Nowshera Plant: Records 50 Percent Profit In Q1; Join Hands With Chinese, Finland Firms

Cherat Cement (CHCC) of Pakistan has announced first quarter net profit-after-tax of PKR606 million (US$5.75 million), up 50 percent year-on-year. The company net sales grew by 33 percent year-on-year to PKR 3.891 billion. It incurred distribution expenses of PKR81 million and administrative expenses of PKR57 million compared with PKR63 million and PKR50 million, respectively in first quarter 2017.

Along with result, CHCC announced the installation of a 10MW WHR system on Line III. The plant is expected to cost PKR1.2 billion and would commence operations right after the start-up of Line III. CHCC already announced a 7100tpd (2.23Mta) expansion project.Incorporated in 1981, Cherat Cement is a premier in the field of cement manufacturing. The Company is listed on Karachi, Lahore and Islamabad stock Exchange. The factory located near Nowshera, is built on land bordering the Cherat Hills, the Company source of high quality limestone.

Cherat Cement has an ISO 9001:2000 certification and manufactures high quality grey Portland cement using modern and sophisticated production facilities. It is also equipped with advanced production and quality control systems.

It is one of the leading producer and suppliers of cement in Khyber Pakhtunkhwa and Punjab and enjoys strong brand loyalty amongst its quality conscious customers. Through its export Cherat has become Afghanistan’s leading brand. According to BMA, the cement industry will likely add 8.9 million tons to its existing capacity of 45 million tons by the end of fiscal year 2017.

Cherat Cement Company announced a net profit of Rs1.96 billion in fiscal year ended June 30, 2017, up 39 percent compared to Rs1.41 billion in the previous year. Earnings per share (EPS) jumped to Rs11.08 in fiscal year 2017 compared to Rs7.96 in the preceding year. Along with the result, the company announced a cash dividend of Rs3.5 per share, taking cumulative pay-out to Rs4.5 per share in the year.

During fiscal year its revenue increased 36 percent year-on-year to Rs9.6 billion due to higher cement dispatches, estimated at 1.47 million tons, up 42 percent year-on-year as a result of commencement of a new production line. However, exports declined 7 percent while local dispatches increased 55 percent year-on-year.

Moreover, the company recorded a lower effective tax rate of 22 percent in fiscal year compared to 32 percent in fiscal year 2016. The lower taxation was due to tax benefit on the company’s new plant. In the fourth quarter of fiscal year 2017 alone, earnings came in at Rs390 million (EPS Rs2.2), down 28 percent quarter-on-quarter.

This decline in earnings is largely due to lower gross margins at 24 percent compared to 32 percent in the preceding quarter, according to a Sherman Securities’ report. The report stated that fiscal year 2017 was likely to be a disappointing year for cement manufacturers as cost pressure limited revenue growth despite the fact that dispatches and capacity utilization remained on the higher side.

FIRST QUARTER NET PROFIT

Cherat Cement (CHCC) of Pakistan has announced first quarter 2018 net profit-after-tax of PKR606 million (US$5.75 million), up 50 per cent year on year. The company net sales grew by 33 percent year-on-year to PKR3.891 billion. It incurred distribution expenses of PKR81 million and administrative expenses of PKR57 million compared with PKR63 million and PKR50 million, respectively in first quarter 2017.

Along with result, CHCC announced the installation of a 10MW WHR system on Line III. The plant is expected to cost PKR1.2 billion and would commence operations right after the start-up of Line III. CHCC already announced a 7100tpd (2.23Mta) expansion project.

 

COMPANY PLAN

In order to increase cement production, Cherat Cement Company Limited is all set to set up a cement manufacturing plant in Nowshera at a cost of Rs12 billion with a capacity to produce 1,300,000 tons cement per annum. Keeping in view the expected rise in the domestic demand of cement, the company has decided to install another production plant at its existing site in Nowshera, Khyber Pakhtunkhwa. The plant will be acquired from M/s Tianjin Cement Industry Design and Research Institute Company Limited (TCDRI). The TCDRI is the largest cement plant manufacturer in China and has wide experience of installing cement plants world-wide and also Cherat Cement in Pakistan.

The plant will have a production capacity of over 1,300,000 tons per annum. The new line is expected to be commissioned in 30 months time. The term loan for the project has been arranged and the letter of credit for the import of the foreign component has been established by the company.

The total cost of the project is approximately Rs 12 billion. As per All Pakistan Cement Manufacturers Association (APCMA), increase in construction activities has pushed up cement demand at local level, as cement dispatches were recorded at about three million tons during the last four months.

Market experts attributed the strong growth to pre-Ramazan rush of the private sector to complete projects, a more concerted effort from the cement industry to boost domestic sales before the fiscal year ends and peak demand from the Rawalpindi-Islamabad Metro Bus project is also a reason of increasing demand.

AFTER-TAX-PROFIT

The company posted an after-tax-profit of Rs1.29 billion for the year ended June 30, 2015, slightly down from Rs1.32 billion a year earlier. Earnings per share (EPS) worked out at Rs8.01 and (restated) Rs9.60 for last year. Turnover rose to Rs6.57 billion for the latest year compared to Rs6.45 billion a year ago. The board declared final cash dividend of Rs3 per share for fiscal year 2015.

Analysts said the profit fell due to decline in gross margins as the cement maker partially fulfilled its power requirements from furnace oil (FO) during peak hours to bring down its weighted average power costs.

SUPPORT OF FINLAND’S WÄRTSILÄ

Cherat Cement has contracted Finland’s Wärtsilä to increase its power output at its Nowshera plant. It has ordered three Wärtsilä 34DF dual-fuel engines capable of operating on both natural gas and heavy fuel oil (HFO). The total electrical output will be approximately 29MW. Wärtsilä will also provide advisors to oversee the installation and commissioning of the engines.

Wärtsilä has supported this timetable by agreeing to deliver their generating sets on a very short timetable. The Nowshera cement plant is also powered by Wärtsilä equipment, consisting of four Wärtsilä 32 engines. The new generators are scheduled for delivery in March 2018 and the plant is expected to be fully operational by June 2018.

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