Lucky Cement Limited has announced its financial results for the year that ended on 30 June 2021.
The company reported a consolidated highest-ever profit after a tax of Rs. 28.22 billion, up by 286 percent or 2.86x as compared to Rs. 7.31 billion during the same period last year. This translates into earnings per share (EPS) of Rs. 70.69 per share as compared to Rs. 18.96 per share that was reported during the same period last year.
On a consolidated basis, the company has achieved net sales of Rs. 207.15 billion, which is 67.40 percent higher than the net sales of Rs. 123.76 billion recorded in the same period last year.
Alongside the result, the company did not announce any dividend with the FY21 results against expectations of a final dividend.
According to the company’s financial statement that was submitted to the Pakistan Stock Exchange (PSX), the increase in net profit was attributable to an increase in the profitability of all the group companies. The profit after tax of the cement segment had grown by 3.21x to Rs. 14.07 billion during the year due to improved margins and sales volumes as compared to Rs. 3.34 billion recorded in the same period last year.
The increase in the sales volumes was due to the availability of the newly commissioned increased capacity line 1 for the full year versus six months during the corresponding period and the growth of the demand for cement in the local market on the back of an increase in construction activities.
While commenting on the results, the AVP JS Global, M. Waqas Ghani, said that the increase in the profit was due to better retention prices, an increase in volumetric sales, and a reduction in FED by Rs. 25 per bag. A heavy dividend income from Lucky Motors Corporation, ICI, and Yunus Energy was another reason for this accretion in the earnings during the year.
He added that the increase in the consolidated net profit was also supported by a considerable increase in the profits of Lucky Motor Corporation (71 percent holding of LUCK) in addition to the profits from other foreign subsidiaries with the Samawah facility that is also in the picture now (online since early March 2021).
On a standalone basis, the company’s overall sales volumes posted a double-digit growth of 30.7 percent to reach 9.96 million tons during FY 2020-21. The local sales volumes had grown by 38.3 percent to reach 7.56 million tons in comparison to 5.46 million tons during the last year. Also, the export sales volumes of the company had increased by 11.3 percent to 2.41 million tons as compared to 2.16 million tons during the last year.
Furthermore, regarding the company’s standalone financial performance, the gross sales revenue had increased by 41.8 percent to Rs. 88.36 billion as compared to Rs. 62.30 billion that was reported last year. The per ton cost of sales had also decreased mainly due to better absorption of fixed cost as a result of the increase in volumes and efficiencies achieved from the new production line in the north.
Despite the impacts of the COVID-19 pandemic situation, the 1.2 MTPA Greenfield cement production facility in Samawah, Iraq had successfully completed its trial production on 10 March 2021.
The company also reported that its 1 X 660 MW supercritical coal-based power project at Port Qasim had achieved a completion status of approximately 98.7 percent by 30 June 2021. Based on the current level of readiness by the NTDC for the provision of an interconnection facility and the government’s support, the company aims to commence commercial operations by October 2021.
At the time of filing this report, LUCK’s scrip at the bourse was trading at Rs. 866, down by Rs. 6.62 or 0.76 percent, with a turnover of 69,223 shares on Monday.
Outlook
Regarding the outlook, the company has reported that while the COVID-19 cases in Pakistan had subsided in the past, the fourth wave of the pandemic has started to pose new challenges. With the government’s focus on getting the majority population vaccinated and curtailing the spread of the virus through smart lockdowns, it is optimistically expected that the economy, in general, will continue the growth momentum as seen in the current year. The increased surge in economic activity that triggered a healthy demand for cement both in the northern and southern regions during FY 2021 is expected to continue.
Several initiatives of the Government include the construction package, the focus on low-cost housing schemes, and the reallocation of liquidity available with the local banks towards the construction and housing sector, the construction of dams and water reservoirs, and CPEC-related activities are expected to continue strengthening the demand.
However, the intense hike in the global commodity prices (particularly the coal and furnace oil prices) after the ease of the pandemic-induced lockdowns is expected to put pressure on the margins. It further reported that the export sales are anticipated to remain stable, but the prices will remain competitive due to a surplus of the capacities that are available in the region.
Source: Pro Pakistani