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
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.