Lahore - Robust performance of Pakistan cement sector in domestic market continued during 2QFY16 with profitability of 13 listed manufacturers posting a growth of 30.4 percent to clock-in at Rs16.14b during the quarter under review.

Cumulatively, 1HFY16 profitability of the sector now stands at Rs27.65b against Rs20.91b in the corresponding period last year, depicting a growth of 32.2 percent YoY. Revenues of the sector during 1HFY16 grew by an impressive 7.5 percent YoY (2QFY16: 12.0 percent YoY) on the back of impressive 16.3 percent YoY growth in local dispatches which more than compensated for 25.9 percent YoY drop in exports in volumetric terms (net loss of 1.05mn tons in exports against net increase of 2.13m tons in local dispatches) and stable pricing discipline. At the same time, COGS per ton during the 1HFY16 also declined to Rs3,625/ton from Rs3,682/ton, owing to plummeting coal and electricity prices. Resultantly, margins of the sector during 1HFY16 clocked-in at a mammoth 40 percent (2QFY16: 41 percent) vis-à-vis 35 percent in the corresponding period last year mainly on account of depressed coal prices (R-Bay down 14 percent in FY16TD), declining electricity prices under monthly FPA and strong growth in local dispatches.

Experts believe more positives in the form of (1) infrastructure and hydel power generations under the ambit of China Pakistan Economic Corridor (CPEC), (2) strong housing construction due to stable security situation and (3) benign outlook of commodity prices are expected going forward.