Karachi: According to AKD Securities research, an increase in cement demand in the country has led to a 3% rise in profitability of cement companies.
The brokerage house, in its analytical report, stated that by the end of the third quarter of FY2026, total profitability of cement companies stood at Rs26.6 billion, reflecting a 3% year-on-year increase. The growth in profits was primarily driven by higher cement demand and improved prices.
Among listed companies at the Pakistan Stock Exchange, Fauji Cement posted a 62% increase in profit, Pioneer Cement rose by 56%, and DG Khan Cement recorded a 25% gain, while Lucky Cement’s earnings remained flat on a yearly basis.
On the other hand, Kohat Cement declines of 20 percent and Chakwal Cement witnessed 16 percent decline in profits. This mainly due to higher coal prices following the closure of the Afghan border. Maple Leaf Cement’s earnings dropped by 30%, largely due to higher finance costs related to an acquisition.
Total cement offtake increased by 5%, while average prices rose by 4%, supporting overall profitability. However, higher coal prices due to the Afghan border closure and a decline in other income partially offset these gains. Notably, Lucky Cement’s profit came in above expectations due to dividend income from its subsidiary, Lucky Electric Power Company (LEPCL).
The sector’s gross margins improved by 55 basis points to 33.2%, supported by higher sales volumes, better pricing, and a 14% decline in electricity tariffs.
Other income in the cement sector declined by 15%, mainly due to lower yields and reduced dividend income from Lucky Cement. However, cash and short-term investments in the sector increased by 58% to Rs212.4 billion.
Operating expenses rose by 19 percent to Rs8.6 billion, driven by higher transportation costs and an 8 percent increase in export volumes. Finance costs declined by 4 percent on a yearly basis to Rs3.4 billion, although a 42 percent increase was observed on a quarterly basis, primarily due to increased borrowing by Maple Leaf Cement for the acquisition of Pioneer Cement.
The sector’s total debt reached Rs158.8 billion, reflecting an 82 percent year-on-year and 58 percent quarter-on-quarter increase.
