Lucky Cement posts 174% profitability growth for the third quarter

Lucky Cement’s subsidiary, National Resources Limited (NRL), is conducting feasibility studies in Chaghai, Baluchistan, near the Reko Diq mines.

Scout drilling has shown promising initial results, but further assessments remain. The final outcomes of these studies are expected in three to four years, company management informed an analyst briefing on Monday.

In the energy sector, Lucky Cement announced that its 28.8MW wind power plant became operational in the second quarter of fiscal year 2025, bringing its total renewable energy capacity to nearly 100MW across its two local cement plants.

The company's wind, solar, and waste heat recovery (WHR) initiatives are now supplying approximately 55% of its total power requirements. Additionally, battery storage is being installed at its Karachi plant to further enhance renewable energy efficiency.

Operationally, Lucky Cement's Karachi plant is running at full capacity, driven by increased exports, while its North plant is operating at 50% utilization.

The company reported an average coal price of PKR 35,000 per ton in the third quarter of FY25. The South plant primarily relied on imported coal, while the North plant used a mix of Afghan and local coal, with a higher proportion of local coal compared to Afghan coal.

International cement operations continued to demonstrate strong performance, and Lucky Electric Power Company maintained 100% plant availability in both the third quarter and the first nine months of FY25.

Addressing concerns over an upcoming royalty on cement bag prices in Khyber Pakhtunkhwa (KPK), Lucky Cement management noted that legal complications exist regarding linking royalty to bag prices. Since royalty is a provincial matter, tying it to bag prices could elevate it to a federal issue, potentially leading to increased cement prices beyond the fair market value of raw materials.

Financial Results

Lucky Cement Ltd. (LUCK) announced a net profit of PKR 13.5 billion ($48 million), translating into earnings per share (EPS) of PKR 9.22, marking a 174% increase from PKR 4.9 billion and EPS of PKR 3.37 in the same period last year.

An analyst at Sherman Securities said the result exceeded estimates due to higher-than-expected other income and lower effective taxation.

The results incorporate the stock split, bringing total outstanding shares to 1.46 billion.

During the quarter, net revenue surged 9.8% to PKR 30.2 billion, primarily driven by a 52% increase in exports, while local dispatches remained stagnant.

LUCK’s gross margin rose to 33%, compared with 29% in the same period last year, an increase of 4 percentage points. The improvement was primarily due to lower coal costs and a more efficient power mix.

“Moreover, other income stood at PKR 10.9 billion, up 380%, primarily due to dividend income from Lucy Electric Power of PKR 6 billion and Lucky Motors with PKR 1.3 billion during the quarter,” the analyst said.

Lucky Cement reported its financial results for the nine-month period ended March 31, posting a profit of PKR 27.3 billion (EPS: PKR 18.67), compared with PKR 18.6 billion (EPS: PKR 12.73) in the same period last year.

The effective tax rate for 9MFY25 was 28.7%, compared with 32.8% a year earlier.