Finance

Domestic sales estimated to fall in FY19 after 7 years

Lahore, July 9, 2019: Pakistan total cement sales during FY19 is expected to remain flat; closing in around 46 million tons during FY19. This has happened after 7 years primarily due to slower economic growth.

According to Topline report, effective capacity utilization during FY19 is anticipated to fall by 11points to 84 percent primarily on the back of multiple expansions by Maple Leaf Cement (MLCF), Cherat Cement (CHCC), Bestway cement (BWCL) and DG Khan Cement (DGKC).  

Total domestic sales FY19 is expected to decline after seven years; down by 3 percent YoY to 39.8 million tons vs 41.1 million tons during FY18A. The primary reason for domestic sales attrition can be attributable to 1) decline in govt. spending, 2) sluggish growth in GDP growth, and 3) rising inflation and interest rates affecting the housing sector.

The region wise data suggests that sales from the northern region are anticipated to decline by 6 percent YoY to 31.9 million tons owing to lower than expected demand from governments projects due to a high base election year. On the contrary, cement sales in the southern region are expected to grow by 11 percent YoY to 7.9 million tons due to the penetration of manufacturers in the south Punjab market.

Total export sales are likely to grow by 37 percent YoY to 6.5 million tons majorly contributed by southern region, with sales expected to witness a growth of 141 percent YoY to 4 million tons. However, sales from the northern region are anticipated to fall by 19 percent YoY to 2.5 million tons, respectively.

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