December 19, 2018 (MLN): Pakistan Credit Rating Agency (PACRA) has maintained entity ratings of Pioneer Cement Limited at ‘A’ for long-term and ‘A1’ for short-term, with a stable outlook forecast.
As per the press release issued by PACRA, the ratings reflect Pioneer Cement’s healthy business profile. The company has been operating a single manufacturing facility and its sales are majorly driven by local market fundamental – an industry wide phenomenon.
During FY18, industry dynamics have shifted significantly on account of lower retention prices, surged international coal prices, increase in FED on coal import. The aforementioned factors have affected the company’s sales.
The upcoming energy projects (12MW WHRPP and 24MW coal power plant) are likely to assist bottom-line in future through power cost savings. The company’s brown-field expansion – 2.2mln tpa – is expected to commission in 4QFY19. This will supplement company’s business profile given higher capacity utilization and adequate channeling of production.
The ratings are dependent on the management's ability to uphold margins, and optimal utilization of existing lines. Timely repayment of long term financing is essential. The company's improved business performance in current stretched economic scenario – challenges on demand front – remains vital for ratings.
