Pioneer Cement Limited saw a 13% increase in revenue to PKR 36.1 Bn in FY23 up from PKR 31.9 Bn in FY22. However, volumes fell to 2.7 Mn tons in FY23 down 20% from 3.4Mn tons in FY22.
Industry volumes were down 16% in comparison. This difference is driven primarily by the company focusing on improving its gross margins which has paid off in an increase from 23% in FY22 to 26% in FY23.
Operating profit for FY23 stood at PKR 8.9 Bn depicting an increase of 35% against PKR 6.6 Bn.
Finance costs increased 20% to PKR 3.20 Bn in FY23 against PKR 2.66 Bn in FY22. Taxation costs increased by 8% to PKR 3.1 Bn in FY23 compared to PKR 2.9 Bn in FY22.
Profit after taxation was recorded at PKR 2.6 Bn in FY23 an increase of 149% against PKR 1.1 Bn in FY22.
The company has increased its retail prices to PKR 1,250 per bag from PKR 1,175 per bag due to the cost impact from axle load restrictions. As a result, retention price now stands at PKR 15,250 per ton.
Power cost stands at PKR 20 per kWH or PKR 1,700 per ton. It uses a coal mix of 71% local to 29% Afghan. The company only uses about 4-6% power from the national grid. The company’s management expects a 2.5 Mn ton expansion for brown field to cost PKR 70 Bn and green field
to cost PKR 90-95 Bn. It would engage in expansions if it sees demand grow 5-6% annually.
PIOC is not prioritizing dividends or share buy backs at this time as it aims to reduce its level of debt. It does not expect a price war given the high levels of debt amongst industry players given high levels of debt.
Cement utilization level is expected to remain between 55% to 58% in FY24 and FY25.
In 1QFY24 the company reported profit after tax of PKR 933 Mn, an increase of 59% against PKR 586 Mn in 1QFY23. Gross margins also improved from 23% in 1QFY23 to 30% in 1QFY24.
Important Disclosures
Disclaimer: This report has been prepared by Chase Securities Pakistan (Private) Limited and is provided for information purposes only. Under no circumstances, this is to be used or considered as an offer to sell or solicitation or any offer to buy. While reasonable care has been taken to ensure that the information contained in this report is not untrue or misleading at the time of its publication, Chase Securities makes no representation as to its accuracy or completeness and it should not be relied upon as such. From time to time, Chase Securities and/or any of its officers or directors may, as permitted by applicable laws, have a position, or otherwise be interested in any transaction, in any securities directly or indirectly subject of this report Chase Securities as a firm may have business relationships, including investment banking relationships with the companies referred to in this report This report is provided only for the information of professional advisers who are expected to make their own investment decisions without undue reliance on this report and Chase Securities accepts no responsibility whatsoever for any direct or indirect consequential loss arising from any use of this report or its contents At the same time, it should be noted that investments in capital markets are also subject to market risks This report may not be reproduced, distributed or published by any recipient for any purpose
