According to a report issued by Al Habib Capital Markets (Pvt) Ltd, Pakistan’s leading cement companies, including Maple Leaf Cement, Lucky Cement, DG Khan Cement and Kohat Cement Co, are all set to announce their 3QFY20 financial results on 23 April 2020, while Cherat Cement Co is scheduled to declare its 3QFY20 financial result on 28 April 2020.
Cement sector earnings are expected to fall in 3QFY20when compared with the year-ago period, according to Al Habib analysts. The research house attributes the decrease to a decline in sales. The reduction in sales is caused by lower cement selling prices as the battle for market share still continues in the north, where the average selling price for 3QFY20 stood at PKR505/bag (US$3.16) as compared to PKR604/bag in same period last year. Other factors include the lower retention price amidst higher input costs and the rising finance cost.
Outlook: Pakistan cement sector
The research house forecasts a 20-25 per cent YoY decline in total cement dispatches in the 4QFY20 as the nationwide lockdown amid the COVID-19 outbreak and the upcoming Ramadan season have put brakes on all construction activities. However, the recently-approved ‘construction sector package’ may help spur local cement demand in the country, therefore raising utilisation levels of cement companies once issues related to COVID-19 settle. This construction package is expected to generate significant cement demand.