Displaying items by tag: Lucky Cement

Pakistan: Lucky Cement has declared its best ever profit after tax of US$71.8m for the year ending 30 June 2012. The result is 70.8% higher than the net profit of US$42.1m made in the same period in 2011.

The company's gross profit increased by 46% as its net sales revenue improved by 28.1% to US$353m from US$276m. Higher sales volume in the domestic market coupled with better retention prices attributed to the record-breaking profit. Local sales volumes grew by 7%, to 3.72Mt from 3.46Mt. However, export sales volume fell by 4% from 2.35Mt to 2.25Mt, mainly due to a focus on the domestic market, which contributed in increasing the overall profitability of the company.

Lucky Cement undertook various capital expenditures in the year ending 30 June 2012, including new refuse-derived fuel (RDF) and tyre-derived fuel (TDF) plants and a new European-origin packing plant. The RDF and TDF plants replaced up to 20% of coal consumption with alternative fuels. During the year, a project of supplying electricity to the Hyderabad Electric Supply Company (HESCO) was also successfully completed whereby a grid station and 22km of interconnection lines were installed. The company is also working on joint venture investments for a cement plant in the Democratic Republic of the Congo and a grinding facility in Iraq.

Pakistan's Lucky Cement received the 'all clear' for its cement imports from the South African regulators last week. The situation exposes the increasingly competitive market in the country after the South African Competition Commission cartel investigations in 2011.

Sales of Lucky Cement were originally shut down in 2011 due to accusations made by its competitors, including Pretoria Portland Cement (PPP) and Natal Portland Cement (NPC). They complained that Lucky was not complying with South African standards. South Africa's National Regulator for Compulsory Specifications (NRCS) then ran its independent investigation and released its results last week.

The regulator's full 28-day test found no evidence that Lucky Cement imports were non-compliant with regards to their quality. A minor infringement concerning underweight bags was found and fixed. However, about a week beforehand, Lafarge South Africa's CEO said that his company was considering approaching another trade body with concerns about 'low-quality cheap cement' imported from Pakistan.

More serious criticism came from the Cement and Concrete Institute when the NRCS admitted that it didn't know how much cement had been imported into South Africa so far in 2012. The NRCS is supposed to inspect and approve the testing bodies each producer and importer uses for every 500t of cement.

Lucky Cement has been a regular importer of cement to South Africa since 2009. It exports around 1.65Mt/yr to over 22 countries in South East Asia, the Middle East and Africa. CCI figures reckon that 140,000t of cement was imported to South Africa in the first quarter of 2012, mostly by Lucky Cement. According to the Global Cement Directory 2012 South Africa's capacity is around 11Mt/yr.

Four domestic producers – Lafarge, PPC, AfriSam and NPC – were accused of cartel activity by the South African Competition Commission, in a case that has been running since 2008. PPC confirmed the existence of the cartel, whilst Lafarge and AfriSam were fined US$19.6m and US$16m respectively.

By letting Lucky Cement resume the sale of its cement in South Africa, the NRCS has arguably done more than the Competition Commission to prevent cartel activity. With reports surfacing that other producers in Pakistan and India are considering exports to South Africa, domestic producers are going to have to become more inventive and more competitive.

South Africa: The South African National Regulator for Compulsory Specifications (NRCS) has cleared imports from Pakistan producer Lucky Cement for use in South Africa.

Thomas Madzivhe, the NRCS's acting chief executive, said that complaints of non-compliance received about Lucky Cement imported from Pakistan had been fully investigated and the NRCS was satisfied the certification bodies had done all the necessary checks and tests and that the cement complied with South Africa's regulations. Madzivhe said that the NRCS suspected market access and competitive and market share issues might be a reason for the complaints.

Musa Ndlovu, the NRCS's acting executive for non-perishable products, said a directive had immediately been issued against Lucky Cement when complaints of non-compliance were received at the end of 2010, which meant this cement could not be sold in South Africa. Ndlovu added that the NRCS had carried out a full 28-day test on the cement but the results did not provide it with any tangible evidence to prove the product was non-compliant in terms of quality. The NRCS had only found evidence once of non-compliance but this was based on under-weight bags and not quality.

South Africa: Lafarge is considering approaching the International Trade Administration Commission of South Africa to protect the local market from what it calls 'low-quality cheap cement' imported from Pakistan. The multinational is concerned that substandard products are being used for large infrastructure projects in the country, including the construction of hospitals, government housing and schools. Some importers are labelling cement as flour to dodge quality tests. Yet when the regulators do test imported product, they refuse to disclose the outcome, citing confidentiality.

"Imports are a concern for several reasons; sometimes the prices are very low, which affects us financially. We are looking at approaching the International Trade Administration Commission of SA to intervene in the market, but no decision has been made," said Lafarge South Africa CEO Thierry Legrand. He added that some cement sellers did not comply with the National Regulator for Compulsory Specifications, yet had import licences. Other domestic producers including AfriSam and Pretoria Portland Cement have also expressed concern at the situation.

In 2011 three companies importing from Lucky Cement, Pakistan's biggest cement exporter, were shut down. Cement and Concrete Institute (CCI) managing director Bryan Perrie said that 140,000t of cement were imported into South Africa in the first quarter of 2012 and that a substantial portion of it probably came from Lucky Cement. "People have struggled to keep accurate import statistics of cement but we know that Lucky is a major importer. People bring cement in as flour, so the statistics of how much comes in is often incorrect," he said.

Importers in South Africa are supposed to test samples for every 500t of imported cement. Yet when the CCI asked third-party regulators about the results of these checks, they were told this was confidential. The CCI had asked the regulator to publish a list of cement importers online, recording which products had letters of authority, but this has not happened.

Pakistan: Lucky Cement has started supplying 20MW/hr of electricity to Hyderabad Electricity Supply Company Limited (Hesco), according to a company announcement. The company said that it was aiming to start selling the same amount of electricity to Peshawar Electricity Supply Company Limited (Pesco) by the middle of July 2012. Speaking on 2 July 2012, a company spokesman said that the talks were underway on the sale and purchase agreement with Pesco.

Since 2010 Lucky Cement has operated 22MW waste-heat recovery units on two cement plants in Karachi and Pezu. The sale of surplus power has enhanced the company's balance sheet, as it struggles against continued low demand in the Pakistan market.

Iraq: The board of directors of Pakistan's Lucky Cement Company has decided to set up a greenfield cement grinding plant with a production capacity of 0.87Mt/yr in Iraq under a joint venture. The board also decided to invest US$15m in the cement plant, which is estimated to cost US$30m as 50% share of its equity. The technical and financial evaluation of the proposed project has already been carried out.

Pakistan: Many Pakistani cement manufacturers have posted robust earnings during the first half of the 2012 financial year, which ended on 31 December 2011. Across the six major producers, representing 68% of the market, the overall profitability of the sector grew by a factor of 2.2 over the same period of 2010. Overall net sales of the sector grew by 32% to US$418m.

Separately most Pakistani cement producers posted profits for the six month period. DG Khan and Lucky Cement, which between them contribute around 25-28% of total cement sales, posted robust earnings per share growth. On the other hand, Fauji and Thatta Cement, despite better overall margins, posted losses. Fauji Cement posted losses due to lower utilisation of its new 2.1Mt/yr plant due to power outages and lower demand, while Thatta cement remained in the red due to extremely low sales, which were approximately 20% of those expected.