KARACHI, June 1: Sales of cement in May 2005 stood at 1.425 million tons, and the eleven months (July 2004 to May 2005) sales aggregated to 14.802 million tons. Figures released on Wednesday by the All Pakistan Cement Manufacturers’ Association (APCMA), showed that Lucky Cement took the lead in respect of exports with sales of 38,423 tons, followed by Pioneer Cement which exported 25,833 tons. Lucky had shipped 8,500 tons and Pioneer 8,330 tons, by sea. Major destinations were Afghanistan and Iraq. Exports by all companies combined stood at 0.171 million tons during May and total exports for eleven months figured at 1.443 million tons.
Local sales of cement during May stood at 1.255 million tons, with aggregate local sales worked out at 13.359 million tons for the eleven months period under review. Market sources estimated that by the close of the year in June, aggregate sales would end up close to 16.5 million tons with average operating capacity at 97 per cent. In the last five years, cement sector sales volume had posted an 8 per cent (Compound Annual Growth Rate) CAGR and going forward, for FY’06, cement sector analysts expected sales to enhance by 11-13 per cent to reach 18.3 million tons.
Local sales in April 2005 were 1.464 million tons and exports 0.187 million tons, both at their highest levels this financial year. Compared to April, sales had shown a drop of 11 per cent in May, which the chief executive of a cement company attributed to shortage of labour as they had gone back to fields in their villages to help during the harvesting season. Also several of the cement plants were under annual repairs and maintenance.
Khalid Iqbal Siddiqui, head of research at stock brokerage firm, InvestCap believes that the impact of the upcoming FY06 budget would be ‘positive’ for the cement sector. He mentions that local cement sector had benefited from pro-development budgets, supporting construction in the last two years. Growth in construction industry was envisaged to be 10 per cent in FY05. The analyst said that a major growth momentum was expected to be seen in the construction industry, which was being targeted to grow by 7.5 per cent in FY’06, in spite of the larger base.
The analyst maintained that if the Central Excise Duty (CED) was reduced -— which he along with most other analysts thought to be quite unlikely — it would help in improvement of cement sector’s profit margins. Some of the gains might also be passed on to end-consumers. Analysts said that cement sector was likely to benefit from the expected increase from Rs202 to Rs272 billion in the Public Sector Development Programme (PSDP), a good portion of which is spent on construction activities.
