Cement Sector’s Quarterly Profit Jumps to Rs. 37.5 Billion

Pakistan’s listed cement companies reported a profit of Rs. 37.5 billion in 1QFY26, up 20 percent quarter-on-quarter and 55 percent year-on-year, driven by stronger domestic demand and lower fuel costs, according to Topline Securities. Net sales rose 15 percent year-on-year to Rs. 181.7 billion, with domestic dispatches climbing 14 percent to 9.6 million tons. Exports increased 21 percent year-on-year to 2.6 million tons, although marginally lower on a quarterly basis. Average cement prices slipped in the North to Rs. 1,382 per bag, but edged higher in the South to Rs. 1,449, impacting margins slightly. Sector gross margins stood at 31 percent, compared with 34 percent in the previous quarter. Despite softer pricing, profitability remained resilient as global coal prices dropped to USD 90 per ton, down 18 percent year-on-year, and industry finance costs declined 49 percent amid easier monetary conditions. Other income surged 71 percent year-on-year, driven mainly by Lucky Cement’s Rs. 6 billion dividend from its power subsidiary. However, excluding Lucky Cement, sector profitability fell 10 percent quarter-on-quarter to Rs. 23 billion, showing the industry’s reliance on its largest player. Lucky Cement accounted for 39 percent of total sector profit, followed by Bestway Cement at 15 percent and Fauji Cement at 9 percent. Together, the three firms contributed 62 percent of overall earnings. Lucky Cement delivered the standout performance, with profit more than doubling year-on-year on stronger margins and higher other income. Its 39 percent gross margin remained the highest in the industry. Other major contributors included Bestway Cement (BWCL), which delivered Rs. 5.5 billion in profit (15% of sector total), up 35% YoY, and Fauji Cement (FCCL), which posted Rs. 3.3 billion in earnings (9% of sector total), down 1% YoY. Sector EBITDA reached Rs56 billion, up 17% YoY but down 2% QoQ, with EBITDA margin at 31%. Finance costs dropped 49% YoY to Rs. 4.5 billion, reflecting monetary easing and sector deleveraging. The effective tax rate fell to 30% from 33% a year earlier. Analysts expect the cement sector to maintain earnings momentum in the next quarter, supported by seasonal demand, stronger exports and easing finance costs.