Finance

Lucky Cement Limited posted unconsolidated earnings down by 14 percent YoY

Karachi, July 29, 2019: During 4QFY19, profitability clocked-in at Ra 2.196 billion (EPS: PKR 6.79), down by 8 percent YoY / 21 percent QoQ. In addition, the company announced a dividend of Rs 6.5 per share (Rs 13.00/share in FY18).

According to Arif Habib Research Company’s topline witnessed a dip of 12 percent YoY to PKR 10.5 billion in 4QFY19 amid the volumetric decline of 13 percent YoY to 1.72 million tons. While during FY19, sales remained stagnant at PKR 48.0 billion given a significant jump in exports (+61 percent YoY to 1.82 million tons) which offset the 12 percent contraction in domestic offtake (5.85 million tons).

Read More: Lucky cement awarded environment excellence award 2019

Gross margin attrition during 4QFY19 by 7 points YoY to 26 percent was owed to volumetric decline (local sales retreated by 10 percent YoY to 1.43 million tons) and depreciation in the Pak Rupee against US Dollar.

We do highlight that on a QoQ basis margins pulled back by 5 percent in light of pressure on retention prices in North, volumetric decline and PKR deprecation. In FY19, gross margins arrived at 29 percent vis-à-vis 36 percent in SPLY due to volumetric decline (2 percent YoY to 7.67 million tons), PKR depreciation and higher coal prices.

Distribution costs during the period under review displayed a dip of 3 percent YoY to PKR 628 million in 4QFY19 in the wake of 25 percent cut in company exports to 289 thousand tons. In FY19, distribution expenses witnessed a surge of 37 percent YoY to PKR 2,729 million led by 2x growth in exports (to 1.82 million tons).

LUCK booked effective taxation at 11 percent in 4QFY19 (4QFY18: 24 percent). While it was 14 percent in FY19 vs. 19 percent in FY18 as the share of exports in the total sales price rose to 24 percent (14 percent in FY18).

According to announcement some 90 percent equipment and machinery for LUCK’s 2.6 million tons brownfield project in KPK has arrived and civil works remain on track. The company has targeted commercial operations to commence in 2QFY20.

Moreover, the first shipment of plant and machinery for the 1.2 million tons Greenfield clinker facility in Iraq is expected to arrive in Oct’19. Whereas the contract for power plant has been finalized with Wartsila and a letter of credit has been arranged. COD is expected in 1QFY21.

Additionally, Lucky Electric Power Company (LEPCL) – a 100 percent indirectly owned subsidiary of LUCK – has initiated construction activity to set up a strategic 660MW coal-based power plant; operations are scheduled to kick off by 1st Mar’21.

Finally, the company has initiated CKD operations at the KIA Lucky Motors Pakistan Limited (KLM) plant where it has commenced booking for the 2,000cc SUV Sportage (delivery will start by end of the ongoing month). While booking and delivery for 1,000cc hatchback Picanto will begin from Aug’19 and Oct’19, respectively.

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