Cement Sector Profits Set to Rise 34% in Q1FY26

Pakistan’s cement industry is expected to post a 34% year-on-year increase in profitability during the first quarter of FY26, driven by higher domestic dispatches, falling coal prices, and easing finance costs, according to a latest report by Topline Securities. The brokerage projects total profitability of Rs. 20.6 billion in 1QFY26, up 10% quarter-on-quarter from Rs. 18.8 billion in 4QFY25. Improved construction and infrastructure activity, coupled with better macroeconomic conditions, have lifted cement demand nationwide. Topline data shows that domestic cement dispatches rose 14% YoY and 2% QoQ in the first quarter. Exports, however, slipped 3% quarter-on-quarter to 2.59 million tons, but remained 21% higher than the same period last year. Overall, total cement dispatches reached 12.1 million tons, a 16% increase year-on-year. Sector utilization stood at 57.5%, with the North operating at 51% and the South at 79%. The South’s higher utilization was mainly supported by strong export volumes. Gross margins for the cement universe are anticipated to clock in at 36% during 1QFY26, an increase of 12.5 percentage points YoY, as declining coal prices continue to ease cost pressures. During the quarter, Richards Bay coal averaged US$90 per ton, down from US$110 per ton in 1QFY25. Cement players in the North used a mix of Afghan and local coal, while those in the South relied mainly on Richards Bay coal. Both northern and southern manufacturers have also adopted alternative fuels and renewables to cut costs and reduce reliance on imported energy. Net sales are expected to rise 10% YoY to Rs103 billion in 1QFY26, mainly supported by higher domestic and export sales. Finance costs are projected to decline 47% YoY and 3% QoQ, thanks to easing interest rates and the sector’s subsidized debt profile. Among individual companies, Lucky Cement (LUCK) is expected to lead the sector with consolidated earnings of Rs. 15.6 per share, up 27% year-on-year and 16% quarter-on-quarter, supported by strong local and export operations. DG Khan Cement (DGKC) is also projected to post a sharp 211% YoY surge in earnings to Rs. 5.73 per share, driven by higher domestic and export dispatches. Maple Leaf Cement (MLCF) follows with earnings of Rs. 2.93 per share, marking a 129% YoY jump, supported by robust sales and lower finance costs. Meanwhile, Fauji Cement (FCCL) is expected to record a modest 18% YoY rise to Rs1.56 per share, benefiting from greater reliance on renewable energy, according to the report. Kohat Cement (KOHC), however, may see earnings dip 9% YoY to Rs3.19 per share, though margins are expected to improve to 38% due to lower coal prices.