As Luck would have it
While dividends are not proportional to income, in absolute terms Rs4 per share is still the highest dividend ever given out. While the company may be ploughing back a higher share of profits into investments, shareholders should remain confident as the company finds a disciplined capital allocation positionby funding long-term growth initiatives and continuing to diversify its income streams.
To put that in perspective, in FY25, other income contributed 43 percent to before-tax earnings. This used to be 8 percent and 11 percent in FY16 and FY17. As a matter of fact, with near negligible finance costs, the other income of 16 percent (of revenue) covers all the overheads and expenses (12% of revenue) and a portion of the company's income taxes. This is something to write home about.
The company's domestic dispatches during the year fell 7 percent, made up for by an export growth of 53 percent. Since exports fetch lower prices, the resultant revenue per ton sold despite improved domestic retention prices remained the same as last year. Lower coal costs and utilization of alternative energy sources brought costs per ton sold down by 1 percent, despite higher royalty payments and expensive grid electricity.
The coming year will showcase a turnaround in domestic demand, driven by development spending and government's tax and subsidy initiatives to boost construction and real estate activity. This will feed cement industry's demand that has been missing in action. In FY25, industry domestic offtake was down 3 percent while industry capacity utilization was trailing close to 50 percent. This will shore up profits for all cement companies, not necessarily Lucky. But it is clear that even a shortage of demand does not pose a major threatto a company like Lucky as it has enough preparation to weather the fiercest of storms.
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3 days ago
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As Luck would have it
The largest cement manufacturer in the country, Lucky Cement (PSX: LUCK) might be coming across a little stingy. The company has ended the fiscal year with a growth of 22 percent in its earnings per share, and yet the dividend payout stands at only 18 percent, higher than last year but lower than the average of 27 percent for the years that the company did give a payout since FY16. The company is putting its eggs in its investments basket by pouring Rs1.2 billion in its associated company for copper and gold exploration in Baluchistan. While dividends are not proportional to income, in absolute terms Rs4 per share is still the highest dividend ever given out. While the company may be ploughing back a higher share of profits into investments, shareholders should remain confident as the company finds a disciplined capital allocation positionby funding long-term growth initiatives and continuing to diversify its income streams. To put that in perspective, in FY25, other income contributed 43 percent to before-tax earnings. This used to be 8 percent and 11 percent in FY16 and FY17. As a matter of fact, with near negligible finance costs, the other income of 16 percent (of revenue) covers all the overheads and expenses (12% of revenue) and a portion of the company's income taxes. This is something to write home about. The company's domestic dispatches during the year fell 7 percent, made up for by an export growth of 53 percent. Since exports fetch lower prices, the resultant revenue per ton sold despite improved domestic retention prices remained the same as last year. Lower coal costs and utilization of alternative energy sources brought costs per ton sold down by 1 percent, despite higher royalty payments and expensive grid electricity. The coming year will showcase a turnaround in domestic demand, driven by development spending and government's tax and subsidy initiatives to boost construction and real estate activity. This will feed cement industry's demand that has been missing in action. In FY25, industry domestic offtake was down 3 percent while industry capacity utilization was trailing close to 50 percent. This will shore up profits for all cement companies, not necessarily Lucky. But it is clear that even a shortage of demand does not pose a major threatto a company like Lucky as it has enough preparation to weather the fiercest of storms.
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From cement to copper: Lucky Cement ramps up mining investment in Balochistan
Lucky Cement Limited, one of Pakistan's largest cement makers, has announced plans to invest up to Rs1.2 billion in its associated company, National Resources (Private) Limited (NRL), following significant copper and gold discovery in Chagai, Balochistan. The cement maker disclosed the development in its notice to the Pakistan Stock Exchange (PSX) on Monday. 'The Board of Directors of the company has recommended that the company makes further equity investment, of an amount of up to Rs1.2 billion, in its associated company, NRL, by subscribing to shares of NRL and acquisition of additional 250 ordinary shares of NRL from Muhammad Ali Tabba, a related party of the company,' read the notice. The listed company shared that this further investment is intended for NRL to conduct pre-feasibility studies, including physical geology, drilling, and mineral resource estimation. 'The above investment shall be subject to obtaining necessary corporate and regulatory approvals, including the approval of the shareholders of the Company in accordance with Section 199 of the Companies Act, 2017, read with the Companies (Investment in Associated Companies or Associated Undertakings) Regulations, 2017,' read the notice. NRL is a joint venture company in which Lucky Cement holds 33.33% equity. It was established to carry out activities in the field of exploration and mining of metals, i.e. mainly gold and copper. Back in April, the NRL announced a discovery of significant copper-gold mineralisation in Chagai, Balochistan. The company was awarded a lease in October 2023. The licensed area contained two known porphyry prospects with strong exploration potential. Financial results On a consolidated basis, Lucky Cement reported gross revenue of Rs559.2 billion in FY25, up 14.3% from Rs489.4 billion recorded last year. 'This increase was driven mainly by improved performance from the Company and its subsidiary, Lucky Motor Corporation,' said the company. The company's net profit clocked in at Rs84.5 billion, of which Rs7.5 billion was attributable to non-controlling interests. This translated into an EPS of Rs52.53 for FY 2025, compared to Rs44.10 in the last year, which is a 19.1% increase. Lucky Cement said that the improvement in net profit was 'primarily driven by the increased profitability of local and foreign cement operations, followed by Lucky Motor Corporation and Lucky Core Industries Limited'.
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ECNEC greenlights 100MW solar project for Gilgit-Baltistan
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