Displaying items by tag: Lucky Cement

Pakistan: Lucky Cement Limited has reported a considerable rise in its net profit for the first six months of its 2015 financial year, which ended on 31 December 2014.

It net profit rose to US$54.9m, some 8.54% higher than in the same period of its 2014 financial year. Lucky Cement's gross profits increased by 9.03% during the period and its net sales revenue improved by 9.37% to US$210m, up from US$192m in its 2014 financial year.

Lucky Cement's local sales volume grew by 9.20% year-on-year to 2.02Mt, compared to 1.85Mt in the same period of its 2014 financial year. Its export sales volume grew by 2.24% to 1.23Mt compared to 1.21Mt in the same six months of its 2014 financial year. Lucky Cement maintained its market share at 19%. During the period, its combined sales revenue increased by 9.37%, which was mainly contributed to by increased sales volumes.

South African authorities have started a new investigation into imports of cement from Pakistan. This time the inquiry will examine trade dumping allegations made by local producers including Afrisam, Lafarge, NPC Cimpor and PPC.

The application made by the cement producers provided evidence that the difference between the price of cement (the dumping margin) in Pakistan and for imports from Pakistan in 2013 was 48%. Or, in other words, the price of Pakistan cement imported to South Africa was nearly half that of what is was being sold for in the country that it was actually produced in.

The data submitted to the International Trade Administration Commission of South Africa comes from a report by Genesis Analytics on Pakistan cement prices in 2013 and tax information from the South African Revenue Service. Neither source is readily available for more detailed analysis here but data released by XA International Trade Advisors suggests that cement imports from Pakistan rose to 1.1Mt/yr in 2013 and at a value of US$59m. Roughly, this gives a price of US$55/t. This compares to an average price of US$90/t, from the All Pakistan Manufacturers' Association for the first nine months of the 2012 – 2013 Pakistani fiscal year, giving a dumping margin similar to the allegation by the South African cement producers.

Separate industry sources quoted by the Pakistan media on the story reported that the country supplies 1.5 - 1.6Mt/yr of cement to South Africa, its biggest export market, receiving a revenue of US$125m. Although this suggests a dumping margin lower than the one presented to the authorities it is still high.

Other information of note in the investigation notification is that the Pakistan cement imports are only competing heavily with the local bagged cement market in the Southern African Customs Union, which also includes neighbouring Botswana, Lesotho, Namibia and Swaziland. The notification discounts bulk cement imports from Pakistan as being 'prohibitively' expensive suggesting that the Pakistan cement producers have no import infrastructure in southern Africa or that something else is stopping them. For example, the country's market leader for production, Lucky Cement, has export facilities in Karachi with silos and automatic ship loaders. Yet it's only 'brick-and-mortar' presence overseas are projects building an integrated plant in the Democratic Republic of the Congo and a grinding plant in Iraq.

It may also be worth considering that South African industry newcomer Sephaku Cement hasn't joined the dumping allegation. The Dangote subsidiary was set to start producing clinker in late August 2014. This is out of character considering how prominent the Nigerian-based cement producer has been in campaigning against imports to its home nation. However, the Aganang plant in Lichtenburg, North West Province is over 700km from the coast and presumably safe from foreign imports at present.

One final question occurs. How are Pakistan cement producers able to dump bagged cement on the South African market at prices lower than what they are selling it for at home? If individual producers sold their excess at home at a lower price they could potentially undercut their competitors and make a profit. There are many barriers, from input costs to industry structural issues and other reasons that may be preventing this. However, if the South African cement producers succeed in their latest attempt to block imports from Pakistan it may add more impetus to remove such barriers.

Iraq: Lucky Cement has started production at a cement grinding plant in Basra, southern Iraq. The US$40m plant is a joint venture between Pakistan-based Lucky Cement and the Al-Shawy family. It has a production capacity of 3000t/day or 0.8Mt/yr. The plant is intended to supply cement for the southern Iraq market.

In comments reported by Mena Report Lucky Cement CEO Muhammad Ali Tabba said that the completed grinding plant is the first phase of development at the site. Lucky Cement may continue development at the plant investing US$125m to build an integrated cement production line with a capacity of 1.25Mt/yr.

Tabba added that Lucky Cement is also working on building a US$240m plant in Democratic Republic of Congo (DRC). It has a 50-50 agreement with the Rawji Group, a local company, to start production via a company called Nyumba Ya Akiba. When operational, the plant in DRC will produce 1.2Mt/yr of cement.

Pakistan: Lucky Cement has won the Green Supply Chain Award at the 3rd International Shipping, Logistics and Supply Chain conference held in Karachi. The conference was organised by the Publicity Channel with the support of United Nations Environment Programme (UNEP) to acknowledge companies that are making sustainability a core part of their supply chain strategy.

The Pakistan-based cement producer has initiated a number of sustainability projects such as alternative fuel, energy conservation and plantation drives. In addition, the company's captive power plants have been upgraded to improve environmental efficiency.

"As an industry leader we have a huge responsibility to foster a culture of environmental sustainability throughout the manufacturing sector. We take pride in stating that we have done this job above par, owing to our innovative strategies in acquiring green technology across all our operations," said Lucky Cement Chief Operating Officer Noman Hasan.

Pakistan: Lucky Cement Limited has reported a year-on-year rise of 43.2% in profit after tax to US$91.9m for the year ending on 30 June 2013, from US$64.1m for the same period in 2012. This is the highest profit the Pakistan-based cement producer has ever recorded.

Sales by Lucky Cement rose by 12% to US$414m from US$370m. The company saw cement sales volumes grow by 1.4% to 6.06Mt from 5.97Mt. Local sales rose by 1.3% to 3.77Mt from 3.72Mt. Exports grew by 1.7% to 2.29Mt from 2.25Mt.

In its annual report Lucky Cement announced that two vertical grinding mills at its Karachi cement plant are scheduled to become operational in the last quarter of the 2013 – 2014 financial year and in September 2014 respectively. A tyre-derived fuel plant is planned to replace coal usage at it Pezu plant. The company is also in neogiation to supply surplus electricity generated at Pezu to the Peshawar Electric Company.

Overseas projects include a joint-venture cement plant in Democratic Republic of Congo, which is at the financial stage, and a joint-venture cement grinding plant in Iraq, which is due for completion at the end of October 2013 with commissioning and trial production due from early November 2013.

In its outlook Lucky Cement noted that cement consumption will rise in Pakistan due to the government's funding of the Public Sector Development Programme. However, rises in utility costs, weakening local currency and other factors will present challenges to the cement industry. The company intends to mitigate utility cost rises by investing in waste heat recovery systems at its Karachi and Pezu captive power plants. Each plant will producer 5MW, with expected completion set for December 2014.

At the beginning of September 2013 Lucky Cement reportedly resigned from the All Pakistan Cement Manufacturers Association. The implications of this departure raise interesting implications for Pakistan's cement industry and its export markets.

Lucky Cement reacted to a growing row over energy prices for cement producers in Pakistan. The government increased electricity taxes for industrial consumers by 55% but only increased gas prices by 17.5%. This has created an uneven rise in the cost of production between those smaller cement producers powered off the national electricity grid and those larger cement producers using captive power plants. Suddenly smaller cement producers have found it much more expensive to make cement than their larger competitors.

Although Pakistan's cement industry contains over 20 producers, it is dominated by four major players - Lucky Cement, Bestway Cement, DG Khan and Maple Leaf – who hold nearly half of the country's cement production capacity of around 45Mt/yr. According to local media covering the spat, Lucky Cement uses 100% captive power generation, DG Khan Cement uses 40% and Maple Leaf Cement uses 45%.

In 2009 the Competition Commission of Pakistan issued fines to 20 cement producers found guilty of acting as a cartel and co-ordinating rises in cement prices. Following the action cement prices fell by 30%. Since then prices have steadily risen again with the industry publicly denying the existence of a cartel as recently as April 2013.

Regardless of whether any collusion exists today, with new cement production capacity announced this week by DG Khan, the incentives for Pakistan's larger cement producers are growing to keep their prices low with the benefit of seizing greater market share. Meanwhile the smaller cement producers could be squeezed on both energy input costs and price.

In Pakistan, if the larger cement producers act on the new market opportunities, industry consolidation seems possible. Internationally, if the big cement producers in Pakistan concentrate more on the domestic market then this presents opportunities elsewhere. For example, markets in East and South Africa receive significant cement imports from Pakistan. If the volumes of these imports decrease then local African producers and rival exporters will benefit.

Changes in Pakistan's cement industry carry implications both at home and abroad in its export markets. Who exactly these changes will be 'lucky' for remains to be seen.

DR Congo: Pakistan-based cement producer Lucky Cement has announced plans to begin construction of a US$240m plant in Democratic Republic of Congo (DRC) in June 2013. Lucky Cement has a 50-50 agreement with the Rawji Group, a banking company, to start production via a company called Nyumba Ya Akiba (NYA), according to Reuters.

"Now's the time to reconstruct a country that was destroyed by civil war," said Sajid Feroze, NYA's chief financial officer.

The proposed factory, to be located around 250km from the capital Kinshasa, is due to come online in late 2015 and will produce 1.2Mt/yr, more than double the current total production in Congo. The country currently consumes just 15kg/capita/yr. Neighbouring Angola uses 300kg/capita/yr and the global average is 400kg/capita/yr said Feroze.

Earlier in May 2013, South African cement firm PPC announced it would build a US$200m cement plant in Congo.

Pakistan: Lucky Cement has announced that its chief executive Muhammad Ali Tabba has been appointed as a member of the cement producer's Human Resource and Remuneration Committee. The committee now includes the following members of the board: Rahila Aleem, Jawed Yunus Tabba, Zulekha Razzak Tabba and Muhammad Ali Tabba.

Pakistan: Lucky Cement reports that its profit after taxation rose by 61.3% to US$27.4m for the quarter ending 31 March 2013, from US$17m in the same period in 2012. Revenue for the quarter rose by 16% to US$120m from US$103m. The cement producer attributed a 20% increase in sales as the reason for the increased profit.

Pakistan: Lucky Cement Limited has outperformed its competition by recording a 42.2% rise in its half-year profit for the year 2012-13. It has declared a profit for the half-year ending on (31 December 2012) of US$43.9m.The company's gross profit increased by 32.3% during the half-year as its net sales revenue improved by 13.9% to US$179.3m.

During the period under review, the combined sales revenue of Lucky Cement increased by 13.9%. This was attributed to a 21.3% growth in domestic sales and a 3.7% growth in exports.

To enhance the quality of cement and for capturing new export markets, Lucky Cement plans to replace its existing cement grinding mills from Chinese suppliers located at the Karachi plant with vertical mills from European suppliers. This replacement will reduce the cost of production due to more energy efficient operations.