Further, on a consolidated basis, the Company achieved gross turnover of PKR 265.70 billion which is 31.2% higher as compared to the same period last year’s turnover of PKR 202.46 billion. During the 9M 2021-22 under review, the Company’s consolidated net profit (attributable to owners’ of the Holding Company) increased by 13.7% as compared to the same period last year. Despite the challenges due to increasing production costs across all segments, the Group has been able to secure double-digit growth in its profitability. The increase in Net Profit was mainly attributable to impressive performance of the Group’s chemicals business and overseas cement segment. The Group’s Polyester, Pharmaceutical and Animal Health segments were able to secure growths of 30.4%, 56.7% and 95.9% respectively in operating results, versus same period last year, on the back of enhanced volumes, better sales mix and new product launches in the pharmaceutical segment.
This increase is in addition to the one-off unrealized gain on acquisition of controlling shares in NutriCo Pakistan amounting to PKR 1.85 billion. On the other hand, the Group’s joint venture cement production facility in Samawah, Iraq, which started its commercial production in March 2021, has also added healthy profits to the Group’s profitability.
During the outgoing quarter, a major milestone was achieved when Lucky Electric Power Company Limited – a wholly owned subsidiary of Lucky Cement, achieved the Commercial Operations Date (COD) of its 660 MW coal-fired power project on March 21, 2022. The addition of 660 MW to the national grid will not only play a key role in increasing the energy security and prosperity of Pakistan but will also go on to reduce the cost of electricity and reliance on imported fuel in the long run after the completion of Phase III of SECMC in June 2023.
On unconsolidated basis Company’s local sales volumes posted a decline of 3.4% to reach 5.51 million tons during 9M 2021-22. The marginal decline for the Company versus negligible change in the industry numbers was mainly due to other cement plants becoming operational in the current period. Moreover, the export sales volumes of the Company decreased by 18.0% to 1.56 million tons compared to 1.90 million tons during the same period last year, on the back of continuous volatility in international coal prices and exorbitantly high freight costs globally. Hence, overall sales volumes of the Company declined by 7.1% to reach 7.07 million tons during 9M 2021-22.
Further, with regards to Company’s unconsolidated financial performance, the gross sales revenue increased by 19.6% as compared to the same period last year. Per ton cost of sales of the Company increased by 49.1% as compared to the same period last year. This was mainly due to substantial increase in coal prices along with other input costs, which was a direct result of international commodity super cycle followed by the continuing conflict between Russia and Ukraine. Lucky Cement recorded net profit after tax of PKR 11.31 billion. It includes amount of PKR 1.48 billion as fee for provision of technical services to Nyumba Ya Akiba, Company’s joint venture in Democratic Republic of Congo during the current financial year. The standalone EPS of the Company is PKR 34.97 / share as compared to the same period last year’s reported EPS of PKR 36.14/ share.
The Company reported progress on its brownfield plant expansion activities in KPK with project completion targeted for December 2022.
Lucky Cement continued its patronage on Education & Scholarship, Women Empowerment, Health, Environment Conservation and reassured its commitment for the development of society and the communities in which it operates. A recent testament of its commitment for energy conservation and promotion of green energy resources was the launch of a 34 MW captive solar power project with a 5.589 MWh Reflex energy storage to be installed at Pezu plant in Khyber Pakhtunkhwa. While the Company has faced non-availability of both Gas and Furnace Oil in the past, with the launch of this project it will not only attempt to overcome the impact of looming energy crisis in the country but will also make its operations sustainable.
As Pakistan once again witnesses significant drop in Covid-19 infections, the challenges posed by the pandemic have reduced significantly. However, the political uncertainty in the country as well Russia-Ukraine tension over-shadowed the recovery from the pandemic. Domestically, the challenges posed by looming energy crisis, circular debt, increased inflation, pressure on balance of payments, reduced foreign exchange reserves, exchange rate parity and fiscal deficit will continue to test the competitiveness of all businesses in the short to medium term. We expect that the performance of the economy will mirror the new Government’s strategy to negotiate and resume IMF program and to improve various economic indicators through sustained and effective policy measures.
The volatility in commodity prices internationally mainly due to Russia-Ukraine conflict, particularly coal and crude oil along with higher freight charges, is constantly impacting input costs of cement. Similar factors have also increased the cost of other construction materials particularly steel, due to which overall construction cost has gone up. On the other hand, due to recent hike in interest rate coupled with double-digit inflation and increasing cost of construction, cement demand is expected to remain under pressure in near future. Albeit in medium to long term, we expect strong demand to come from construction of dams, hydropower projects and other real estate development projects.