Earnings rise to Rs37.5bn on higher dispatches and lower coal costs; excluding Lucky Cement, profits drop 10%.

Pakistan’s listed cement sector posted a consolidated profit of Rs37.5 billion in the first quarter of FY26, reflecting a 55% year-on-year and 20% quarter-on-quarter increase, according to a report by Topline Securities released on Tuesday. The sector’s revenues rose 15% YoY and 6% QoQ to Rs181.7 billion, driven by higher volumetric dispatches despite a slight decline in cement prices.Power cement increases Cement price by Rs300 per ton

Excluding Lucky Cement (LUCK), however, the sector’s profitability slipped 10% QoQ to Rs23 billion, underscoring the company’s significant contribution to overall results. LUCK alone accounted for 39% of the cement sector’s profit in 1QFY26, with its standalone earnings surging 2.2 times YoY to Rs14.6 billion, supported by a 130% jump in other income and a 35% rise in gross profit.

Industry-wide domestic cement dispatches increased 14% YoY and 3% QoQ to 9.6 million tons, while exports rose 21% YoY but fell 3% QoQ to 2.6 million tons. Average bag prices in the North declined by 2% QoQ to Rs1,382, while in the South they rose 3% to Rs1,449. Sector gross margins stood at 31%, marginally higher than 30% a year earlier but down 300 basis points from 34% in the previous quarter due to lower retail prices.

The decline in margins was partly offset by lower energy input costs. Players in the South largely relied on imported Richards Bay coal, priced at around US$90 per ton — down 18% YoY — while northern producers used a mix of local and Afghan coal. Lower fuel costs helped sustain margins despite pricing pressures.

Other income surged 71% YoY and 66% QoQ to Rs13.1 billion, mainly due to Lucky Cement’s Rs6 billion dividend from its subsidiary Lucky Electric Power Company (LEPCL). The sector’s EBITDA came in at Rs56 billion, up 17% YoY but down 2% QoQ, with an EBITDA margin of 31%. Finance costs declined sharply — down 49% YoY and 14% QoQ to Rs4.5 billion — amid monetary easing that has allowed firms to reduce leverage.

Among individual players, Bestway Cement (BWCL) contributed 15% to sector profits, earning Rs5.5 billion in 1QFY26, a 35% YoY increase helped by lower finance costs and higher associate income, though down 13% QoQ on weaker gross profit. Fauji Cement Company Ltd. (FCCL) accounted for 9% of total profits at Rs3.3 billion, marking a slight 1% YoY dip and a 16% QoQ decline amid softer northern prices.

LUCK, BWCL, and FCCL together represented 62% of the sector’s total profitability. Topline expects the momentum to continue in 2QFY26, supported by stronger local and export demand, easing coal prices, and reduced borrowing costs. The brokerage reiterated an overweight stance on the sector, with Lucky Cement, Fauji Cement, and Maple Leaf Cement Factory (MLCF) as its top picks.