Lucky Cement Profitability up 213% in 4QFY21

Lucky Cement Limited’s profitability has clocked in at Rs4.6 billion that amounts to earning per share price (EPS) of Rs14.32, up by 213 % on year on year basis. The share price earning of Lucky Cement is up by 41% on quarter to quarter (QoQ) in 4QFY21 compared to profitability of Rs1.5 billion in 4QFY20.

This takes FY21 profitability to Rs22.9 billion causing earning for a share price of lucky cement at Rs70.69 up 273% YoY as compared to a profit of Rs6.1bn in FY20.

The unconsolidated earnings clocked in at Rs7.37 per share price (up by 488/67% YoY/QoQ) in 4QFY21.

Impact

Foundation Research in a report said that LUCK’s profitability increased due to an increase in cement dispatches given better retention prices and higher profitability from Lucky Motor Corporation Limited.

Lower fixed cost contribution per unit also amid better utilization and increased efficiencies of new plant and enhanced profitability share from ICI Pakistan Limited given higher revenue of the company.

It said that LUCK un-consolidated net sales increased by 68% YoY in 4QFY21 due to 37% YoY increase in domestic dispatches given better retention price in both regions.

Furthermore, LUCK exports increased by 5% YoY in 4QFY21. To highlight, on sequential basis LUCK domestic/export dispatches declined by 9/12% QoQ in 4QFY21. The decline in sequential exports is due to QoQ 2.8ppt rupee appreciation in 4QFY21.

To highlight, LUCK’s un-consolidated gross margins increased/decreased by 10.4/9.1ppt YoY/QoQ in 4QFY21.

Margins declined sequentially due to higher energy costs given a 15.6ppt QoQ increase in international coal prices.

Its consolidated revenue increased by 72% YoY due to increased cement sales, 56% YoY increase in turnover of ICI, and higher revenue of LMCL.

LUCK also consolidated gross margins increased by 10.2ppt YoY in 4QFY21 due to better cement retention prices amid higher volumes and lower fixed cost contribution and better efficiency from the new cement plant.

Increased sales of Lucky Motor Corporation Limited and better core delta for ICI also contributed.

Its admin cost declined significantly by 64/83% YoY/QoQ in 4QFY21.

We await further clarity from management on this front, Foundation Research said.

LUCK distribution cost increased by 64/31% YoY/QoQ in 4QFY21 due to higher volumetric sales amid increased fuel prices.

Among other major heads LUCK, other operating expenses increased by 475/98% YoY/QoQ in 4QFY21.

Other income increased by 52/2% YoY/QoQ in 4QFY21 due to the strong cash position of the company and higher earnings contribution from Iraq/Congo/Yunus Energy businesses.

The high growth trajectory of the cement business along with diversification in earnings and higher expected liquidity would play in the company’s favor. Moreover, a better utilization level given higher cement demand would allow a gradual increase in cement prices in FY22/23.