April 28, 2021 (MLN): Lucky Cement Limited (LUCK) has announced its 9MFY21 financial result, as per which its net profits surged by 3.9x YoY to Rs22.15bn compared to the profits of Rs5.68bn in the corresponding period last year.
This translated into earnings per share of the company which clocked in at Rs56.36 against Rs14.38 in the SPLY.
According to the financial statement issued by the company, the primary reason behind robust growth in profitability was the increase in net profitability of the Cement segment (Holding Company) which grew by 3 times due to higher turnover supported by better absorption of fixed costs and efficiencies achieved from the new production line in the North. The upsurge in profitability was also supported by a considerable increase in Net Profit of Lucky Motor Corporation which has been able to secure 3.5 times growth in revenue as compared to the same period last year.
The cement industry in Pakistan grew by 17.0% to 43.33 million tons during the nine months ended March 31, 2021, in comparison to 37.04 million tons during the same period last year. The local sales volume registered a healthy growth of 18.3% to reach 36.18 million tons during the nine months under review versus 30.59 million tons during the same period last year. Export sales volumes also registered an increase of 10.9% to reach 7.15 million tons during 9MFY21 compared to 6.45 million tons during the same period last year.
Strong double-digit growth in dispatches is mainly attributed to economic recovery amidst low-interest rates, construction package announced by the government, subsidized loans for housing by the Government, reallocation of banking sector liquidity towards the construction and housing sector and work on the construction of dams.
In comparison to the Cement Industry, LUCK’s overall sales volumes posted high double-digit growth of 30% to reach 7.61 million tons during 9MFY21. The local sales volumes grew by 38.8% to reach 5.71 million tons in comparison to 4.11 million tons during the same period last year. Also, the export sales volumes of the Company increased by 12.3% to 1.90 million tons as compared to 1.69 million tons during the same period last year.
The increase in Company's local sales volume during the period under review is mainly due to the enhancement of operational capacity at Pezu Plant coupled with the higher demand for cement due to an upsurge in economic activities.
Moreover, growth in export sales volume is mainly due to higher exports of loose cement owing to effective push by the Company, keeping in view the better margins and its unique position to make such sales.
During the period under review, LUCK's net revenues increased by 66% as compared to the same period last year, led by a 30% YoY jump in the company’s offtake coupled with a sharp turnaround in retention prices and soft coal prices. Moreover, a rise in export volume also contributed to LUCK’s topline growth with a major contribution from North American and European markets. Additionally, dollar appreciation during the period further strengthened revenues since a major chunk of the company’s export revenue is denominated in USD.
Accordingly, the gross profit margins of the company improved massively from 16% to 22% during the period largely led by strong topline growth, lower coal prices, improved efficiencies from the new line, price hike in North, and PKR appreciation which offset the impact of higher coal prices.
The Other income of the company surged by 31% YoY to Rs5.3bn from Rs4bn in the SPLY. This was due to better payouts by Company's subsidiary / associated companies as a result of improvement in profitability, primarily from Lucky Motors Corporation Limited.
On the taxation front, the company booked an effective tax rate of 14% compared to 21% in 9MFY20.
Alongside financial results, the company also provided updates on its upcoming projects, where 660MW coal-based IPP targeted commercial operation is expected to be extended till 1QFY22 from 3QFY21. Delay in COD is primarily attributable to force majeure during the COVID-19 crisis which caused a delay in interconnection work. Meanwhile, the clinker facility in Iraq of 1.2mn tons has started commercial production from Mar-21. For the expansion of the Pezu plant, project activities have commenced and targeted completion by Dec’22.
|
Consolidated Profit and Loss for the nine months ended March 31, 2021 ('000 Rupees) |
|||
|---|---|---|---|
|
|
Mar-21 |
Mar-20 |
% Change |
|
Revenue |
202,460,151 |
123,988,042 |
63.3% |
|
Sales tax and excise duty |
(38,010,561) |
(24,234,883) |
56.8% |
|
Rebates and commission |
(7,655,032) |
(5,319,131) |
43.9% |
|
Net sales |
156,794,558 |
94,434,028 |
66.0% |
|
Cost of Sales |
(121,587,518) |
(79,678,132) |
52.6% |
|
Gross Profit |
35,207,040 |
14,755,896 |
138.6% |
|
Distribution cost |
(6,984,508) |
(5,799,983) |
20.4% |
|
Administrative expenses |
(5,140,911) |
(3,185,645) |
61.4% |
|
Finance cost |
(1,106,838) |
(2,015,548) |
-45.1% |
|
Other expenses |
(1,467,561) |
(603,830) |
143.0% |
|
Other income |
5,319,400 |
4,066,636 |
30.8% |
|
Profit before taxation |
25,826,622 |
7,217,526 |
257.8% |
|
Taxation |
|
|
|
|
current |
(3,375,290) |
(2,005,596) |
68.3% |
|
Deferred |
(297,187) |
469,905 |
-163.2% |
|
|
(3,672,477) |
(1,535,691) |
139.1% |
|
Profit after taxation |
22,154,145 |
5,681,835 |
289.9% |
|
Earnings per share – Basic and Diluted (Rupees) |
56.36 |
14.38 |
291.9% |
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