Cement sector posts modest QoQ growth amid economic challenges

The cement sector showed modest performance in the second quarter of fiscal year 2024, as it mostly absorbed the impact of last year’s economic decisions.

The sector recorded a 9.6% QoQ growth in net profits, which clocked in at Rs21.2 billion as against Rs19.3bn in the previous quarter.

Despite stagnant dispatches in 2QFY24 amid economic slowdown, unprecedented inflation and high interest rates, profitability rose amid better cement prices and operational efficiencies.

The gross margins improved to 34.55% as against 29.92% in the previous quarter.

The overall cement industry’s total dispatches were recorded at 12 million tonnes, up 1% QoQ, according to All Pakistan Cement Manufacturers Association (APCMA) data.

Coal trended downward during the review quarter providing much-needed relief in cost for the cement industry.

However, prices have started to pick up since February 2024 due to disruption in the Red Sea and landed cost have increased mainly due to an increase in sea freight.

Richard Bay Coal has increased more than 10% in the last month to about $100.

This has also resulted in a hike in locally available coal of Afghan origin.

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