Lucky Cement suffers the brunt of adverse pricing

October 30, 2019 (MLN): Lucky Cement Limited has reported Net Profit of Rs. 1.53 billion (EPS: Rs. 3.93) for the first quarter ended September 30, 2019, i.e. 51.7% lower than the earnings of the same period last year.

In comparison to the industry, Lucky Cement’s overall sales volumes declined by 13.6% to 1.64 million tons during the first quarter. The local sales volume registered a decline of 19.4% and were 1.12 million tons in comparison to 1.40 million tons during the same period last year.

The decline in the volumetric sale was mainly due to cut-throat pricing on the back of lower demand and retentions on account of stringent ‘Axle Load’ limits’ implementation.

However, the export sales volumes of the company improved by 2.6% to 0.51 million tons as compared to 0.50 million tons during the same period last year.

On a consolidated basis, the company achieved a gross turnover of Rs. 34.43 billion which is 9.9% higher as compared to the revenue for the same period last year.

Moreover, the cost of sales increased by 18.6% due to an exceptional increase in gas and other fuel prices, higher fixed costs absorption and coal transportation costs increase due to the ‘Axle Load’ limits’ implementation.

Apart from the adverse pricing and cost inputs, the profitability of the company was further impacted due to higher transportation and distribution costs.

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