Inside Financial Markets

Handsome Bottom-Line Growth In 1QFY16 – Cements Sector

WE Financial Services Limited.

In our today’s morning briefing we would discuss the performance of cement sector in 1QFY16.

PAT hikes over 29% YoY

On back reduced coal prices along with better local sales volume, cement sector managed to start the new fiscal year on a good note as its cumulative profit after taxation (PAT) totaled Rs 11,588 million in 1QFY16 resulting in a 29.5% YoY as against a PAT of Rs 8,951 million in 1QFY15. The bottom-line growth was also boosted by slight rise in retention prices and lower operating expenses. However, the profitability of the sector was affected by surge in finance cost and higher effective taxation due to imposition of one-time 3% Super Tax. Our analysis consists of 15 listed companies which have announced corporate results so far representing 96% market capitalization of the sector.

Double digit growth in gross profit

Mainly with the support of better sales volume, the net revenue of the sector increased by 3.1% YoY in 1QFY16 to Rs 50,558 million as against Rs 49,059 million in 1QFY15. On the other side due to lower coal prices, the cost of sales dropped 5.5% YoY in 1QFY16 to Rs 30,999 million versus Rs 32,792 million in the identical period in FY15. Therefore gross profit elevated by 20.2% YoY during the period under review to Rs 19,559 million as against Rs 16,266 million in 1QFY15. The gross profit margin of the sector reached 38.7% in 1QFY16 versus 33.2% in 1QFY15.

Volumes: Local climbs 11% YoY, Export dip 29% YoY

Thanks to rise in construction activities in the country which boosted the local cement demand as a result of which local sales volume of the sector grew by 11% YoY in 1QFY16 to 6.75 million tons versus 6.09 million tons of cement sold in the same period in FY15. The performance of the export segment however stayed bleak as its sales fell 29% YoY due to availability of cheaper Iranian cement in Afghanistan and anti-dumping duty imposed in South Africa.

The export sales totaled 1.47 million tons during the period under review as against 2.06 million tons in 1QFY15. Therefore the overall cement sales rose 1% YoY in 1QFY16 to 8.22 million tons as compared to 8.15 million tons in 1QFY15.


We are positive on the sector moving forward with growing construction activities in the country while the prices of cement and coal are likely to remain stable.

Baqar Hussain

A Wannabe CFO, just had stepped in the corporate sector, willing to explore every aspect here and learn as mush as i can, awareness for those who dont, get the info where ever possible and stay up to date always.

The Canadian Securities Institute


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Inside Financial Markets was a joint publication of Pakistan Stock Exchange (PSX)and Society of Technical Analysts Pakistan (STAP)