Cement Profits Rise 60% in 4QFY25

Pakistan’s listed cement sector reported earnings of Rs30.91bn, up by 60% YoY and down by 8% QoQ. 

Sales for the cement sector remained flattish on a QoQ basis and increased by 5% YoY to Rs167.8bn in 4QFY25. Sector revenue decreased on a QoQ basis due to 6% decline QoQ in domestic dispatches.

Export dispatches were up by 33% YoY and down by 55% QoQ to 2.7mn tons in 4QFY25.

In FY25, domestic dispatches witnessed a decline of 3% YoY, while the export dispatches were up by 29.5% clocking at 9.2mn tons.Power cement increases Cement price by Rs300 per ton

Average bag prices in the North increased by 4% QoQ to Rs1,413 in 4QFY25 (vs. Rs1,360 in 3QFY25), while in the South, prices rose by 3% QoQ to Rs1,420 (vs. Rs1,382 in 3QFY25).

Gross margins of the sector rose to 34% in 4QFY25 (vs. 29% in 4QFY24) and were also up QoQ by 4bps, driven by lower coal prices and a cost-efficient energy mix.

 In FY25, gross margins of the sector expanded by 3.9ppts, clocking at 31.9% vs 28% in FY24.

During 4QFY25, cement players in the southern region mostly relied on Richards Bay coal, while those in the northern region used a combination of Afghan and local coal (Darra).

Notably, in 4QFY25, major cement players began incorporating alternate fuels (biomass) into their fuel mix at around 5–10% alongside coal, which contributed to significant fuel cost savings and improved sector gross margins.

Richards Bay coal prices fell by 16% YoY and 6% QoQ to US$90/ton in 4QFY25.

Other income of the sector was down by 50% YoY and 48% QoQ to Rs7.8bn in 4QFY25, mainly due to the absence of Rs6.0bn dividend to Lucky Cement from its wholly owned subsidiary Lucky Electric Power (LEPCL).

Notably, Lucky Cement (LUCK) accounted for 26% of the cement sector’s total other income.  The cement sector reported EBITDA of Rs 55 bn, up 25% YoY by 12.6% QoQ in 4QFY25.

To highlight, the EBITDA margin of the sector stood at 32.8% in 4QFY25 vs 27.6% in 4QFY24 and 29.1% in 3QFY25.

Finance cost of the sector clocked in at Rs4.9bn in 4QFY25, down by 50% YoY and 21% QoQ, attributable to monetary easing, which has led cement players to deleverage their balance sheet.

 The sector reported an effective tax rate of 33.1% in 4QFY25 vs 47.9% in 4QFY24 and 29% in 3QFY25.

In FY25, profitability increased by 52% YoY to Rs123bn, owing to improved retention prices,  increasing gross margins, and lower finance costs.

LUCK, BWCL, and FCCL combinedly contributed 52% to overall profitability.

BWCL stood out as the leading contributor, accounting for 20% of the cement sector’s profitability in 4QFY25.

BWCL’s profitability increased 83% YoY, driven bya  53% decline in finance costs and a 3x increase in the share of profits from associates. On a QoQ basis, profitability increased by 4% QoQ due to lower finance cost and an increase in gross profit.

LUCK accounted for 19% of the cement sector’s total profitability in 4QFY25, posting earnings of Rs5.7bn, which marked a 39% YoY decline, mainly attributable to a 73% drop in other income.

On a QoQ basis, LUCK profitability was down by 57% due to a decline in other income and net sales.

FCCL contributed 13% to the cement sector’s profitability in 4QFY25. The company’s earnings stood at Rs3.9bn, up 3x YoY, driven by higher net sales, improved gross margins, and a decline in effective tax rate (ETR).

FCCL’s gross margins improved to 39% in 4QFY25, up from 36% in 4QFY24, primarily due to an efficient energy mix and lower coal prices.

To highlight, Maple Leaf Cement (MLCF) achieved gross margins of 40% in 4QFY25, the highest in the cement sector.

LUCK, BWCL, and FCCL collectively represented 57% of the cement sector’s profitability in FY25, with individual contributions of 27%, 19%, and 11%, respectively.

Outlook: Topline expects profitability to improve in 1QFY26, marking a positive start to the year. This will be driven by stronger domestic and export demand, declining coal prices, an improved energy mix, and improved retention prices.

We maintain our overweight stance on cthe ement sector, where LUCK, FCCL, and MLCF are our top picks,” Topline said.