Cement sectors profit surged during 1HFY

According to Investment Cap Research report, Cement sector’s financial performance during the period was quite impressive, as the sector profitability turned around and marked Rs 5.2billion in the bottomline against a loss of Rs1.6 billion during same period last year. Topline of the sector grew by a healthy 33 percent YoY to Rs 70 billion during 1HFY12 compared to Rs 53 billion last year.Gross margins of the sector also improved by a solid 946 basic points YoY to 26.4 percent as the sector enjoyed 38 percent YoY increase in product prices in the 1HFY12 (net retention price improved by an average 28 percent YoY).As far as individual companies are concerned, remarkably and after a long time, sector giant Lucky Cement’s share in the sector profits shrank to 58 percent in 1HFY12 against 88 percent last year, as other smaller loss-making manufacturers also came into profits this time around (10 companies were in profits against only 4 last year). In this regard, DG Khan Cement posted enormous growth in its 1HFY12 earnings with a jump of 566 percent YoY to Rs1.28bn (doubled its sector profit share to 24 percent this time).Bestway Cement (3rd in row with 14% contribution to sector profits) also saw a turnaround in the bottomline from losses last year, followed by Kohat Cement and Attock Cement with 11 percent and 10 percent share in sector profits against -4 percent and 8 percent last year respectively.