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Cherat Cement: PACRA Maintains Entity Ratings of Cherat Cement Company Limited – Press Release issued by The Pakistan Credit Rating Agency Limited

Following is the text of press release issued by The Pakistan Credit Rating Agency Limited (PACRA)

Quote

The Cherat Cement’s installed capacity stands at 4.5mln tons per annum where company currently holds 7% share in the country’s operational cement capacity. During 1HFY20, the Company’s revenues witnessed increase attributable to uptick in cement dispatches (end-Dec19: PKR 9.5bln, end-Dec18: PKR 7.0bln); sales volume increased to 1.78 tons (1HFY19: 1.08 tons). However, margins witnessed significant decline in line with peers. Cement sector achieved second phase of expansion (18 mln tpa).

However, slow local demand and expanded capacity resulted in depressed cement prices (especially in north region). Export is another avenue. Industry wide exports (sizeable increase in South Region) have gone up as new export window is created in Bangladesh market where sector is exporting notable volumes of cement and clinker. Cement sector’s local capacity utilization already recorded dip to 65% in 1HFY20 (FY19: 68%). This will be further impacted amid COVID-19 outbreak and country wide lock down being observed.

The likelihood of impact is considered high where quantum is directly correlated with tenure of lock down. Curtailed key policy rate will provide much needed breathing space to the sector. The company’s efforts of incentivizing dealers in order to enter new markets and developments in achieving cost efficiencies are a positive. The strengthening of business profile by achieving previous higher utilization levels, healthier margins is essential. The Company’s financial profile is moderately leveraged whilst significant dip in profitability and increase in finance cost has led to decline in coverage. Going forward, improvement in profitability for timely repayment of debt remains vital.

The rating are dependent on upholding company’s market position along with sustenance of business volumes and margins. Company’s long term debt repayment is important to improve financial risk matrix. The company’s strong business performance in current stretched economic scenario – challenges on demand front – remains vital for ratings.

For more information visit: www.pacra.com

Consumption of domestic cement declined by 16.70 percent in March

As expected Coronavirus had its impact on domestic consumption that declined by 16.70 percent in March while the exports grew at lowest pace of 5.27 percent as the global markets are equally under pressure due to the same reason.

According to the data of APCMA in March, the industry despatched 3.721 million tons of cement that was 14.26 percent less than the despatches of 4.340 million tons during the corresponding month of last year. The pressure was heavier from the domestic market where the uptake was reduced to little less than 3.2 million tons from 3.85 million tons in March 2019.

Exports though inched up from 0.482 million tons last in March 2019 to 0.507 million tons this March 2020. Increase in exports should be viewed with huge loss of Indian market. Exports to India have remained zero this fiscal while last year during the first nine months, Pakistan exported 0.716 million tons of cement to India.

North based mills despatched 2.749 million tons locally, which was almost 10.48 percent lower than the despatches of 3.017 million tons during the corresponding month of last fiscal. As per recent trends, exports from the North based mills also decreased in March 2020 by 18.85 percent to 0.107 million tons, from 0.132 million tons in March 2019.

Southern region of the country reported a decline in domestic despatches by 40.96 percent, as it fell from 0.787 million tons in March 2019 to 0.464 million tons in March 2020 while exports registered a rise of 14.32 percent to 0.401 million tons last month, as compared to 0.351 million tons in March 2019

PM Imran Khan announces package for the construction industry

PM Imran Khan announced a package to address hindrances faced by the construction sector. This should bode well for the demand for cement and steel. Key takeaways from his speech are as follows:

  1. All the people investing in the construction sector this year will not be questioned about their source of income.
  2. The tax rate will be fixed for the construction sector, and constructors will be charged tax per square foot or square yard.
  3. People carrying out construction in the Naya Pakistan Housing Scheme for the poor will only have to pay 10 per cent of the fixed tax.
  4. Withholding tax will be waived off for all construction sectors except the formal sectors of steel and cement.
  5. Sales tax will be reduced in coordination with provinces.
  6. Any family selling their house will not have to pay any capital gains tax.
  7. A subsidy of Rs30 billion to be given for the Naya Pakistan Housing Scheme.
  8. Construction sector to be given the status of an industry.
  9. Construction Industry Development Board to be set up to support the sector.

Liebherr and Designwerk develop first fully electric truck mixers

Swiss construction firm Liebherr recently announced an all-electric first for heavy-duty construction sites. Meet the ETM — a five-axle semi-truck mixer based on the new 670 HP all-electric Volvo FM. It’s the first mixer that’s 100% electric, and 100% awesome.

First, let’s talk about what it means for the new Liebherr to be “100% electric.” On conventional cement mixers, the truck itself — the semi that “carries” the mixer — is powered by a diesel engine. That seems fairly obvious, now that I type it out. The part that might not be obvious, though, is that there’s sometimes a second combustion engine spinning the drum. And, while Liebherr has offered an electric drum drive model, this is the first time an electric mixer drum drive has been mated to a fully electric truck chassis.

liebherr electric mixer

Got all that? Because, honestly, I barely understand how conventional hydraulic drums work. The electric ones, meanwhile, seem pretty straightforward. Electrons spin the thing, the thing mixes the stuff, the stuff comes out. I get it. Thankfully, Liebherr explains some of the benefits of electrification like the experts that they are, writing that, “For the first time, both the truck and the truck mixer body are powered jointly by the traction battery, eliminating the need for costly power electronics components. The new Liebherr Generation 05 electrified body offers further advantages. The compact electric drive for the mixing drum is flanged directly to the drum and its high efficiency ensures that power consumption for relieving the traction battery of the Futuricum truck remains low.”

Advantages not spelled out by Liebherr mirror those of the CASE 580 EV that debuted last week. These include a quieter, cooler, less polluted environment for both the workers on the job site and the “civilians” who live and work near the site.

Leibherr claims other advantages, too. “(The ETM 1005) also eliminates the need for any hydraulic equipment. Liebherr’s truck mixer body boasts a low net weight combined with good transport volume, a long service life due to its special wear-resistant steel and the ergonomic design of the operating system and access points,” writes Emily Thomas of World Cement. “A platform system on both sides allows flexible positioning and attachment of accessories or attachments to suit customer requirements.”

VIS assigns IER of A/A-1 to Maple Leaf Cement Factory

VIS Credit Rating Company Limited has assigned initial entity ratings of single-A Plus/A-One Plus to Maple Leaf Cement Factory Limited.

The long- term rating signifies good credit quality with adequate protection factors. Risk factors are considered variable if changes occur in the economy. Short- term rating of ‘A-1’ depicts high certainty of timely payments. Liquidity factors are excellent and supported by good fundamental protection factors, risk factors are minor. Outlook on the assigned rating is stable, said release on Thursday.

The assigned ratings to MLCF incorporate the company‘s market position as one of the leading cement players in the country. Ratings also reflect the company‘s satisfactory and efficient operations with MLCF being one of the low-cost producers in the cement sector. Ratings are constrained by current challenging sector dynamics and weakening in financial profile over time. However, MLCF‘s re-profiling of all long-term debt till end of fiscal year 2020-21 from proceeds of rights issue provides support to ratings.

Maple Leaf Cement temporarily suspends plant operations

Maple Leaf Cement Factory Limited has decided to temporarily suspend the plant operations with immediate effect, said the company in a statement to the Pakistan Stock Exchange on Mar 27, 2020.

The statement further said that the company suspended plant operations in view of the measures for COVID-19 with regard to the prevailing situation and current lockdown in the country.