DG Khan Cement shifts to 95% imported coal as Afghan supplies halt

D.G. Khan Cement Company has shifted almost entirely to imported coal as border closures with Afghanistan halted supplies of Afghan-origin fuel, company officials said during a corporate briefing.

Management told analysts that 94-95% of the company’s coal requirement now comes from imports, with only 5-6% sourced locally. Imported coal prices are currently in the $95-107 per ton range, according to the briefing.

The company said its total power generation capacity stands at 184.8 megawatts, against an internal requirement of 113MW. Power is sourced from a diverse mix, including furnace oil, gas, waste heat recovery, coal and solar, while 30-35% of electricity needs are met through the national grid. Average power generation cost for the year was estimated at PKR 25-30 per kWh.

Analysts reported that management expects double-digit domestic demand growth in FY26, consistent with trends seen in the first four months of the year. The company noted, however, that the impact of recent floods has not yet fully materialized and may emerge after winter.

Exports remained a bright spot. Management said the United States continued to offer the highest export margins during FY25, with retention prices around PKR 11,000 per ton for cement and PKR 8,000 per ton for clinker.

The company has also started bulk cement exports to the MENA region, shifting its focus from clinker to cement due to stronger demand and more attractive margins.

Management said the North-South price differential remains about PKR 400 per ton, with current retention prices at PKR 15,800 per ton in the North and PKR 15,400 per ton in the South. While the removal of the export surcharge will improve retention, “it is not expected to have a significant impact on profitability,” according to the briefing.

Financial and operational performance

D.G. Khan Cement recorded a profit of PKR 8.7 billion (EPS PKR 19.80) in FY25, up 16% from PKR 542 million (EPS PKR 1.24) a year earlier, driven by stronger margins and improved retention prices. Kiln operational days rose 10% year over year to 760, while clinker production climbed to 75% utilization, up from 65% last year.

The company’s overall utilization reached 79% in FY25, compared with the industry’s 55%. Its clinker capacity across DG Khan, Khairpur and Hub totals 22,400 tons per day.

Industrywide, cement dispatches rose 2.1% to 46.2 million tons in 2025, supported by a 30% increase in exports, which reached 9.2 million tons. Local dispatches fell 2.6% in the North and 5.2% in the South. Management expects local demand to grow by double digits, driven by reconstruction activity in flood-affected regions.

Gross margins improved to 25.7%, aided by cost efficiencies and a PKR 817 million reversal of electricity duty, though margins softened in 1QFY26 due to royalty provisions. Analysts noted that financial charges dropped 55% because of lower policy rates and reduced borrowings.

Management said the company’s coal mix for FY26 is expected to remain around 95% imported and 5% local, with average prices likely to stay in the $95-105 range.

Looking ahead, the company said any future expansion would be a brownfield project at D.G. Khan, contingent on improving economic indicators and strengthening demand. “We are evaluating options and will move forward once conditions allow,” management said in the briefing.