Cement production is expected to increase by 40%
Cement producers plan to increase their production capacity by more than 40%, from nearly 69 million tonnes to nearly 99 million tonnes over the next few years with a forecast of 10-15% growth in sales. sales every year, according to a local media report /
Quoting an official from the Pakistan Cement Manufacturers Association (APCMA), the report said almost all cement manufacturers planned to increase their production capacity through plans for new factories and brownfields. Many projects, especially brownfields, are expected to be commissioned over the next two years, adding nearly 18 million tonnes to existing capacity.
“Almost 95% of the new capacity is planned in the north – mainly in the Punjab – where the strongest growth in demand is to come.”
The report says the industry predicts higher sales as construction activity picks up further thanks to a generous housing program announced by the Prime Minister last year to help the economy recover from the impact of the Covid-19 pandemic.
In addition, mega infrastructure projects, the resumption of work on projects and dams linked to the CPEC, the massive 625 basis point reduction in the central bank’s key rate from 13.25% to 7% in March and June of last year as well as the availability of cheaper long-term finance for new and old projects under the Temporary Economic Refinancing Facility (TERF) initiative, which diluted the cost of borrowing by industry in different sectors, have added to the attractiveness of undertaking such ambitious expansion plans.
It can be mentioned that total cement shipments – both domestic and export – jumped 19% to 48.3 million tonnes between July and April, from 40.5 million tonnes a year ago. Domestic sales are up nearly 19% to 40.2 million tonnes and exports by around 20% to 8 million tonnes.
After-tax profits of listed companies rose to Rs 35 billion in the first three quarters of the current fiscal year through March, after losing Rs 8 billion last year, sales of the industry having soared 37% to 264.3 billion rupees.
In the third quarter, the industry’s profits reached Rs 18.4 billion, more than half of total profits in the nine months of the current fiscal year.