January 26, 2024 (MLN): Lucky Cement Limited (PSX: LUCK) recorded a surge of 2.15x YoY in its profits in the first half of FY24, with the company's after-tax profits rising to Rs38.32 billion [EPS: Rs117.19], compared to a profit of Rs17.82bn [EPS: Rs48.88] in the same period last year (SPLY).
Going by the results, the company's top line increased by 11.51% YoY to Rs206.52bn as compared to Rs185.21bn in SPLY.
This increase in revenue was primarily attributable to increased domestic sales and higher revenue from subsidiaries of the company, namely Lucky Electric Power Company Limited and Lucky Core Industries Limited.
The cost of sales fell by 1.83% YoY, consequently, the gross profit improved by 61.43% YoY to Rs63.06bn in 1HFY24.
Moreover, during the review period, other income rose by 3.27x YoY to stand at Rs10.08bn in 1HFY24 as compared to Rs3.08bn in SPLY.
On the expense side, the company observed a rise in distribution cost by 40.60% YoY and other expenses by 24.99% YoY to clock in at Rs7.4bn and Rs2.33bn respectively during the review period.
The company’s finance costs rose by 40.14% YoY and stood at Rs19.22bn as compared to Rs13.72bn in 1HFY24, mainly due to high-interest rates, fueled by persistent inflation peaking at 29%.
On the tax front, the company paid a higher tax worth Rs10.04bn against the Rs4.28bn paid in the corresponding period of last year, depicting a rise of 134.66% YoY.
During 1HFY24, navigating through economic volatility posed significant challenges for the country, the company said.
The prevailing high-interest rates, alongside imminent adjustments in power and gas tariffs aligned with the ongoing IMF program, have considerably affected businesses in Pakistan.
Meanwhile, the government's stringent actions against smuggling and illegal currency outflows have yielded positive outcomes, stabilizing the exchange rate.
The company said that its management remains vigilant and is closely monitoring these developments.
"We continue to effectively apply strategies and resources to mitigate any impacts on the operations and financial performance of the company," it added.
| Consolidated (un-audited) Financial Results for six months ended 31 December, 2023 (Rupees in '000) | |||
|---|---|---|---|
| Dec 23 | Dec 22 | % Change | |
| Sales | 206,522,692 | 185,205,864 | 11.51% |
| Cost of sales | (143,460,968) | (146,142,331) | -1.83% |
| Gross Profit | 63,061,724 | 39,063,533 | 61.43% |
| Distribution cost | (7,399,233) | (5,262,641) | 40.60% |
| Administrative expenses | (4,287,910) | (2,863,401) | 49.75% |
| Share of profit – joint ventures and associate | 8,452,681 | 3,650,206 | 131.57% |
| Other Income | 10,084,108 | 3,083,746 | 227.01% |
| Other expenses | (2,326,648) | (1,861,529) | 24.99% |
| Finance cost | (19,221,514) | (13,715,554) | 40.14% |
| Profit before taxation | 48,363,208 | 22,094,360 | 118.89% |
| Taxation | (10,039,377) | (4,278,282) | 134.66% |
| Net profit for the period | 38,323,831 | 17,816,078 | 115.11% |
| Basic earnings/ (loss) per share | 117.19 | 48.88 | – |
Amount in thousand except for EPS
Overview of company's performance
LUCK's cement dispatches in 1HFY24 reached 4.41 million tons, showing a 23% YoY increase.
This growth was primarily due to the addition of a new line in Pezu, a significant increase in exports, and a lower base in the previous year, which was impacted by factors such as floods, rain, and smog-related shutdowns, hindering construction activities nationwide.
Export dispatches increased by 59% in 1HFY24 compared to the SPLY, while local dispatches saw a 16% increase.
The cement production facilities in Iraq and Congo, operated under joint venture agreements, continued to enhance the Group's profitability with increased margins.
Iraq's cement demand improved, while Congo's demand remained stable.
Additionally, full capacity utilization at Najmat-Al-Samawah, in Iraq, and the conversion of the Kiln from HFO to Gas, further boosted the company's profitability.
Polyester, Soda Ash, and Chemicals
The net turnover for 1HFY24 was Rs60.2bn, 22% higher compared to the SPLY.
Net turnover for Chemical & Agri Sciences, Pharmaceuticals, Soda Ash, Polyester, and Animal Health businesses increased by 49%, 30%, 26%, 12%, and 2% respectively as compared to the SPLY.
The operating result for the same period was Rs8.1bn, 53% higher than the SPLY.
The Chemicals & Agri Sciences, Pharmaceuticals, Soda Ash, Animal Health, and Polyester businesses delivered higher operating results by 202%, 72%, 46%, 12%, and 7% respectively as compared to the SPLY.
The Soda Ash business's performance was mainly driven by higher export volumes following the completion of the 60,000 tons per annum (TPA) expansion project in the previous year.
The Polyester business showed recovery, despite slow off-take in downstream markets due to a bleak global economic situation amidst monetary tightening and high energy tariffs.
During this period, the subsidiary's Board of Directors granted an in-principle approval for a capacity expansion of 200,000 TPA at the company's Soda Ash plant in Khewra, Punjab.
Following the successful completion of the proposed expansion, the total installed capacity of the Soda Ash plant will increase from the current 560,000 TPA to 760,000 TPA.
The subsidiary entered into a Share Purchase Agreement with Lotte Chemicals Corporation on January 26, 2023, which was subsequently assigned to Lucky Core Ventures (Private) Limited (LCV) (wholly owned subsidiary) for the acquisition of approximately 75.01% of the issued share capital of Lotte Chemical Pakistan Limited, comprising 1,135,860,105 ordinary shares.
On January 12, 2024, this agreement was terminated by LCV, as the conditions required for completion could not be met within the stipulated time frame.
Consequently, LCV decided not to proceed with the transaction.
Automobiles & Mobile Phones
Since the beginning of July 2023, the automobile sector has experienced a sharp decline in volumes.
This downturn was attributable to several factors including currency fluctuations, the introduction of 1% CVT on cars with an engine capacity of 1300 CC and above, increased sales tax rates from 17% to 25% on cars with engine capacity of 1400 CC and above and for SUVs regardless of their engine capacities.
Moreover, challenges have been compounded by high-interest rates, stricter auto financing regulations by the SBP, and rising inflation and fuel prices, Lucky Cement said.
During 1HFY24, the automobile sector observed an overall volume decline of more than 50% compared to SPLY.
However, the mobile phone market has seen an overall improvement during this period compared to SPLY.
This was attributable to improved supply situation following the lifting of import restrictions on mobile phone SKD kits by the government.
Power
LEPCL commenced its commercial operations in March 2022 and is currently in its second year of operation.
The plant completed 3.4m safe manhours without any loss of time due to injury (since inception) during this 1HFY24.
The plant also successfully completed its second annual maintenance shutdown during this quarter, undertaking several jobs for further improvement in plant operations.
Having addressed most performance-related issues in the first year, the plant has maintained 100% commercial availability throughout 1HFY24.
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Posted on: 2024-01-26T09:50:06+05:00
