Pioneer Cement suffers losses on the back of lower retention prices and high production cost

September 30, 2020 (MLN): Pioneer Cement Limited has declared losses of Rs. 209.6 million (LPS: 0.92) for the year ended June 30, 2020, as compared to the earnings of Rs. 790.3 million (EPS: 3.48) recorded last year.

The losses were incurred on the back of lower retention prices in local and export markets, which resulted in a 35.4% decline in topline income. On the other hand, the cost of sales came down by 16% despite higher production costs and energy tariffs observed during the year.

The finance costs showed an increase of 45.1% owing to excessive loans taken by the company for expansion purposes, as well as higher interest rates.

The company was also given a tax credit of Rs. 545 million, which gave a breather to its financial wellbeing.  

A report by Multiline Securities has projected a much better financial picture for the FY21, owing to expectations of decline in FED by 25%, along with an increase in cement prices due to higher demand from infrastructure spending.

The company’s dispatches are likely to outperform the market in FY21 due to growth in domestic demand, abetted by the company’s recently installed line-3 having an annual capacity of 3 million tons. However, this recovery might be limited by the high debt servicing costs arising from prior cost capitalization for capacity expansion.

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