The overall profitability of cement manufacturers is expected to shrink by 24 percent in Q3 of fiscal year 2018-19 to Rs 5.09 billion on a quarterly basis mainly due to increase in input cost and drop in sales’ growth.
Industry experts said that profit after taxation for cement manufacturers had also declined enormously in first and second quarters, ranging from 15 percent to 80 percent, as compared to the same periods of the previous years.
Profitability of the cement industry was continuously declining for the last few quarters, and the situation keeps on worsening amid increase in input cost and heavy duties and taxes on cement consumption, they added.
According to data, during the third quarter, cement sector underperformed the index by 7 percent due to mixed developments in key driving factors. On the one hand, additional supply of 2.1 million tonnes of cement by some new plants during low demand period also led to the increased pricing pressure in the market.
An expert in the cement industry said that despite increase in input cost, the manufacturers have absorbed most of it to not hurt the construction activities; however, it had badly affected their profitability in third quarter of this financial year.
Despite that, the industry is contributing significantly to the government revenues and contributed more than Rs 115 billion in duties and taxes last year.
It is to be noted that DG Khan Cement suffered the most with its PAT going down to Rs 417.82 million in Q1, as compared to Rs 2.83 billion during the same period of last year.
Among bigger players, Bestway Cement had managed to earn PAT of Rs 2.26 billion in Q1, however it was 25 percent less than almost Rs 3 billion they earned in same period of previous year. Lucky Cement’s PAT dropped from Rs 3.01 billion in Q1 FY17 to Rs 2.48 billion in same period this year, depicting a 17 percent decrease.
