Pakistan’s cement industry likely to grow at average rate of 5%

Pakistan’s cement industry is likely to grow at an average rate of five per cent in coming 4-5 years, anticipates by local research house. Analysts assumed local cement dispatches at 41.77Mt and export sales at 8.03Mt in FY20 with total cement dispatches due to grow by 3-6 per cent annually during FY22-25.

Historically cement sector has performed exceptionally well by posting a five-year CAGR of 10 per cent (FY14-FY18) in high margin domestic sales. However, FY19 saw the trend reversing on the back of political uncertainty, lower GDP growth and high twin deficit. Consequently, local cement dispatches declined by two per cent, YoY, to reach 40.34Mt in FY19, only to be partially mitigated by an abnormal surge in exports of 37.8 per cent, thus allowing FY19 total dispatches to grow by 2.2 per cent, YoY.

Meanwhile, 1HFY20 numbers painted a rosy picture with local dispatches up 3.5 per cent, YoY, to 20.373Mt and export sales up 22.9 per cent, YoY, to 4.377Mt primarily on the back of demand emanating from private sector housing schemes and dealers building buffer stock since CNIC condition is set to be re-imposed in January 2020.