Cement industry profitability declines by up to 80%.

LAHORE -- The overall profitability of cement industry has dropped enormously by up to 80 percent during the FY19 as compared to the previous year mainly due to increase in input cost and drop in sales' growth.

According to the industry experts, different cement companies have registered a decline in profitability considerably, as the profit of DG Khan Cement was down by 82%, Kohat Cement profit was declined by 17%, Bestway cement profit was dropped by 23%, Cherat cement profit was lowered by 17%, Attock cement profit was decreased by 53%, Lucky Cement profit was down by 14% and Mapleleaf cement profit registered a downfall of 60%.

The industry experts said that profitability of the cement industry was continuously declining for the long time and the situation keeps on worsening amid increase in input cost and heavy duties and taxes on cement consumption, they added.

They said that the Pakistan cement industry in 3QFY19 had posted its lowest gross margins of 23.6% since 2011 amid higher input costs, lower local demand and weak pricing power. Consequently, industry's pretax earnings had fallen by 25% YoY (-19% QoQ) during the outgoing quarter.

Experts said that decline in the sector's net earnings was restricted to 10% YoY in 3QFY19 thanks to lower effective tax rate, down 15ppts to 7.7%. Margins contracted amid lower local demand, weak local prices and higher input costs. To note, sector's GP margins have been under pressure since Jan 2017. Industry...