Islamabad March 4 2022: During the first half 2022,the local cement dispatches increased by 11 percent as compared to same period last year mainly due to surge in local demand.
As far as export markets are concerned, the company did not push for increased dispatches due to lower prices. As a result both export of cement and clinker reduced by 62 percent and 54 percent respectively.
Considering lower demand in export markets and pricing constraints, the Company decided to close one of its production lines in order to preserve the lower priced coal and lower cost produced clinker in order to maintain the profitability of the Company at decent levels.
However, as soon as the global prices of clinker / cement would improve and input cost will come down the Company will consider restarting its Line-1.
However, Civil work on the Line-IV project has commenced and almost 30 percent shipments of plant and machinery have arrived at plant site. The work on the project is in full swing and it is expected that the plant erection would be completed by 1HY 2023.
Installation of an additional Line 4 will enhance the Company’s production capacity by 4,250 tons per day. The estimated cost of completion of the project is expected to be USD 100 million which is financed through Temporary Economic Refinance Facility and Long Term Finance Facility of the SBP.
The net sales revenue of the Company decreased by PKR 1,175 million (11 percent) over corresponding period due to reduced dispatches by 563,413 tons as compared to same period last year. The overall net retention (both cement & clinker) increased by Rs 1,800 per ton (30 percent) primarily due to higher local sales as it constitutes around 60 percent of total dispatches as compared to 37 percent in same period of last year. Due to robust local market, the company was able to partially pass on the cost impact and net retention of cement in local market increased by 12 percent as compared to same period last year.
On the other side of equation production cost per ton has increased by PKR 1,745 per ton (36 percent) mainly due to steep rise in fuel prices in international market, followed by increase in electricity charges, higher diesel and bag prices. The coal prices in the international market has so far increased from around US$ 75 / ton FOB in December 2020 to over US$ 160 / ton FOB in December, 2021.
Increase in fuel and power cost along with other related increases in input costs eroded the gains achieved through increase in net retention and consequently the gross margin reduced from 24 percent to 20 percent as compared to same period last year as full impact of the cost increase could not be passed to the customers due to stiff competition in the local markets.
Subsequent to half year ended December 31, 2021, the Company received dividend of US$ 2.0 million from its subsidiary Company Saqr Al Keetan For Cement Production Company Limited and accordingly the Company booked dividend income of PKR 354 million. Further, exchange gain of PKR 192 million has also been recorded on account of inward remittances. This leads to increase in operating margin from 9 percent to 14 percent as compared to same period last year.
Accordingly the profit after tax is reported at PKR 852 million (December 31, 2020: PKR 545 million) higher by PKR 307 million (56 percent) as compared to same period last year.
20MW Solar plant project was successfully completed on January 1, 2022 and complete power generation has started which is being used for internal consumption only. This will help the Company to reduce its dependence on the national grid which would in turn reduce overall power cost.
Attock Cement Pakistan Ltd was incorporated in Pakistan on October 14, 1981 as a public limited company. The company is a subsidiary of Pharaon Investment Group Limited Holding S.A.L, Lebnon. Its main business activity is manufacturing and sale of cement.