Cement sector witnesses a depressing dispatch volume during FY19

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By MG News | July 22, 2019 at 06:01 PM GMT+05:00

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July 22, 2019 (MLN):  The Cement sector has witnessed a depressing dispatch volume during FY19 as dispatches for the month of Jun 2019 decreased by 27% MoM to clock in at 3.01million tons. While YoY basis, dispatches posted a meagre decline of 1% against 2.98 million tons in the similar month last year.

Cumulatively, this brings FY19 dispatches to 46.16 million tons in contrast to 45.89 million tons in FY18, marking a rise of 1% YoY.

Contrary to negative growth in local dispatches, the export market performed relatively better as export dispatches during FY19 have risen sharply by 37%YoY.

 On a regional scale, the northern region has borne the brunt of sluggish demand conditions as dispatches in North fell 27% MoM. The southern region on the other hand, was the saving face where the local and export dispatches witnessed a growth of 11% and 141% YoY respectively.

Company wise, DGKC and ACPL led the growth in total dispatches by 30.7% and 29.5% YoY respectively, however this increase was recorded mainly on the back of expanded capacities which in case of DGKC provided them with increased market access in the southern region as well, says a research report by Shajar Capital.

In terms of dispatches, FCCCL, MLCF, PIOC and BWCL recorded the most considerable decline in volumes posting a negative growth of 13%, 9.2%, 6.3% and 5.4%YoY respectively.

As per the research report by Aba Ali Habib Securities, key reasons behind drop in cement dispatches were lower GDP growth, decline in real estate activity and cost pressure.

On the other hand, a considerable fall in MoM was largely accredited to benign construction activities in the holy month of Ramadan and festive holidays following it, says a report by IGI Securities.

In FY20, the demand pressure is expected to persist amid high inflation, high intertest rates and fiscal consolidation. According to research note by AKD Securities, the ongoing regulatory tightening with tussles between FBR and traders will take a toll on local cement dispatches, while continuous fiscal consolidation and monetary tightening will keep the demand in-check for FY20.

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