Shams ul Nisa

Lucky Cement Limited (LUCK), Pakistan’s largest cement manufacturer, posted strong results for the first half of the ongoing fiscal year 2024-25, largely fuelled by a significant surge in exports, reports WealthPK.

Despite sluggish domestic demand caused by higher taxes and lower infrastructure spending, the company witnessed a remarkable surge in export volumes, which doubled to 1.8 million tonnes in 1HFY25 from 0.9 million tonnes in the same period last year. This growth was driven by strong global demand for clinker and cement, supported by the company’s expanded production capacity and strategic international market focus. As a result, the company’s export revenue soared by 64% to Rs17 billion, with key markets in the Middle East, Africa, and South Asia contributing to the increase.

However, the company faced a tough domestic market in 1HFY25, with local sales volumes declining by 14% to three million tonnes due to lower infrastructure spending, a slowdown in construction activity, and higher industry taxes, including increased Federal Excise Duty (FED). Despite these challenges, the company managed to boost its local sales revenue by 5.3% to Rs72.6 billion, largely driven by higher cement prices, which helped counterbalance the drop in volumes.

LUCK’s international operations remained a key driver of its financial growth during the period under review, with joint ventures in Iraq and Congo reporting higher sales volumes and improved margins. The company’s Najmat-Al-Samawah plant in Iraq operated at full capacity, further strengthening profitability. This helped the company successfully diversify its revenue streams, reducing its reliance on the domestic market and mitigating the impact of local economic slowdown by expanding its global footprint.

Despite rising inflation and higher energy costs, LUCK has successfully mitigated production expenses through cost management strategies and operational efficiencies. The company also gained from declining global freight rates, which lowered export logistics costs and boosted profitability.

Moreover, the company has optimised its production capacity while maintaining cost competitiveness by prioritising clinker exports, a globally high-demand product. Additionally, its commitment to sustainability is evident in investments in renewable energy and energy-efficient technologies, which have reinforced its market leadership, reducing its carbon footprint while enhancing long-term operational efficiency.

LUCK remains optimistic about sustaining growth despite domestic market challenges, as lower interest rates and increased government spending under the Public Sector Development Programme (PSDP) are expected to boost construction activity.

The company plans to expand its footprint in high-growth export markets, leveraging its strong brand reputation and production capabilities. The company continues to strengthen its market leadership through innovation, efficiency, and global expansion with its robust export performance offsetting local demand constraints.

Credit: INP-WealthPk