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Pakistan: sales down, profits up

World Cement,

The 2011 financial year has seen a turnaround for the Pakistani cement industry, which saw profit of Rs.2.54 billion against a loss of Rs.2.59 billion in the previous fiscal.

While sales volumes declined 8% last year, increased prices have been the driving force behind the upswing. According to reports, prices have increased 31% from last year in the north of the country and 24% in the south.

In August this year, exports fell by 5.94% from July 2011 and by 16.57% from August 2010. In July and August 2011 combined, exports were down 20.03% y/y. The impact on sales has been less significant, but still the July – August period saw sales decrease by 6.2% from US$80.900 million to US$75.888 million, according to reports.

The price hikes have caused some to accuse the Pakistani cement industry of collusive behaviour, but the industry denies such allegations, pointing to the high input costs and low capacity utilisation suffered as a result of the economic slump in the country. Increased competition across the traditional export markets has also had an impact.

In the current fiscal, analysts expect margins to remain intact, levies to fall, and the initiation of new construction activities to support stronger sales in the domestic market.

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