Attock Cement Pakistan Limited (PSX: ACPL) was incorporated in Pakistan as a public limited company in 1981. The company is engaged in the manufacturing and sale of cement. The company is the subsidiary of Pharaon Investment Group Limited Holding S.A.L, Lebanon.
Pattern of Shareholding
As of June 30, 2024, ACPL has a total of 137.427 million shares outstanding which are held by 2354 shareholders. Pharaon Investment Group Limited, S.A.L, Lebanon holds 84.06 percent shares of the company followed by local general public holding 7.14 percent shares. Around 4.20 percent of the company’s shares are held by Modarabas & Mutual Funds and 2.71 percent by insurance companies. The remaining shares are held by other categories of shareholders.
Financial Performance (2019-24)
Except for a slide in 2020 and 2022, ACPL’s topline has posted year-on-year growth over the period under consideration. Conversely, its bottomline plunged from 2019 to 2021 followed by a rebound in the subsequent years. ACPL margins drastically fell until 2021. In 2022, gross margin continued to slump while operating and net margins rebounded. In the following year, gross margin saw considerable improvement, net margin also ticked up while operating margin slightly fell. in 2024, gross and operating margins drastically fell while net margin picked up. The detailed performance review of the period under consideration is given below.
In 2019, ACPL’s topline grew by 25.98 percent year-on-year to clock in at Rs.20,780.93 million. This was on the back of robust demand of both cement and clinker in both local and export markets. ACPL achieved the dispatches of 3.205 million M tons, up 28.50 percent year-on-year in 2019.
Local sales grew by 1.7 percent year-on-year to clock in at 1.857 million M tons while export sales posted a tremendous growth of 28 percent to clock in at 0.59 million M tons. Clinker exports stood at 0.758 million M tons, up 269.4 percent year-on-year. The prices remained highly competitive due to addition of new players in the market.
As a result, ACPL couldn’t pass on the impact of cost hike to its consumers. Its gross profit inched up b a paltry 0.1 percent in 2019 while its GP margin drastically fell from 29 percent in 2018 to 23.11 percent in 2019. While coal prices eased off during the year, it was offset by steep depreciation of Pak Rupee. Distribution expense multiplied by a massive 80.87 percent in 2019 on account of higher quantities exported during the year which drove up freight, handling and other export related expenses including higher commission.
Administrative expense lessened by 5.25 percent in 2019 primarily due to lower payroll expense. Lesser profit related provisioning drove down other expense by 8.13 percent in 2019. Conversely, other income registered a tremendous 383.20 percent rise in 2019 due to vigorous exchange gain on account of staggering export sales. Nevertheless, operating profit eroded by 10.46 percent in 2019 with OP margin standing at 14.57 percent, down from OP margin of 20.50 percent posted in 2018.
Finance cost mounted by 158.17 percent in 2019 on the back of higher discount rate and increased short-term borrowings. This pushed down ACPL’s net profit by 52.88 percent in 2019 to clock in at Rs.2073.20 million. This translated into EPS of Rs.15.09 in 2019 versus EPS of Rs.32.02 recorded in 2018. NP margin also deteriorated from 26.67 percent in 2018 to 10 percent
In 2020, ACPL’s net sales took 10.97 percent slide to clock in at Rs.18,500.57 million. During the year, the total capacity of the sector reached 63.6 million tons while local demand stood at around 39.9 million tons and export demand at 7.8 million tons. Due to excess supply in the market and low demand due to the outbreak of COVID-19, ACPL’s cumulative dispatches dropped by 8.8 percent to clock in at 2.924 million M tons. While local and export sales of cement tumbled by 33 percent and 11.5 percent respectively in 2020, clinker exports mounted by 52.7 percent in 2020.Lower coal prices during the year were offset by higher packaging material cost, elevated electricity charges and Pak Rupee depreciation. Moreover, the shift in sales mix from bag packaging to bulk clinker also reduced the overall packaging cost. While gross profit slipped by 11.53 percent in 2020, GP margin slightly ticked down to 22.97 percent. Distribution expense multiplied by 29.41 percent year-on-year in 2020 due to increased combined exports of cement and clinker which pushed up export related expenses incurred during the year. Administrative expense inched up by a paltry 0.35 percent in 2020. While number of employees increased from 968 in 2019 to 1005 in 2020, resulting in higher payroll expense, it was greatly offset by lower legal & professional charges and low rent, rates and taxes incurred during the year. Profit related provisioning also took a dive in 2020, translating into 38.38 percent lower other expense. Other income also shrank by 20.51 percent in 2020 on the back of lower exchange gain and scrap sales made during the year. Operating profit eroded by 32.19 percent in 2020 with OP margin contracting to 11 percent. Finance cost lowered by 18.90 percent in 2020 despite the fact that discount rate was higher for most part of the year. This was the result of ACPL availing lost cost export refinance scheme to meet its working capital requirements and its ability to pay off its entire long-term loan availed for line-3 project. Net profit descended by 46.58 percent year-on-year in 2020 to clock in at Rs.1107.49 million with EPS of Rs.8.06 and NP margin of 6 percent.
ACPL registered 14.83 percent growth in its topline in 2021 which clocked in at Rs.21,244.56 million. The stimulus packages introduced by the government of Pakistan to revive the economy instilled life in the cement sector which registered 20 percent rise in its overall dispatches in 2021. ACPL’s overall dispatches rebounded by 15 percent year-on-year in 2021 to clock in at 3.366 million M tons. Local off-take grew by 19.8 percent while export sales slightly dropped by 0.3 percent in 2021. Clinker exports, however, remained strong clocking in at 1.355 million M tons, up 17 percent year-on-year in 2021. The inability of the company to pass on the impact of escalated coal, electricity and packaging prices to its customers due to superfluous supply in the market pushed down its GP margin to 21.85 percent in 2021 despite 9.26 percent rise in its gross profit. Distribution expense spiked by 20.34 percent in 2021 on the back of higher clinker export coupled with elevated fuel charges. 12 percent year-on-year rise in administrative expense in 2021 was the consequence of higher payroll expense despite streamlining of workforce to 990 employees. ACPL made greater provisioning for WWF and WPPF in 2021, resulting in 23.68 percent higher other expense. Conversely, other income declined by 42.28 percent in 2021 as the company made no net exchange gain in 2021. Operating profit dwindled by 7.83 percent in 2021 with OP margin falling to 8.90 percent. Finance cost sank by 32 percent in 2021 due to monetary easing. Net profit stood almost stable at Rs.1107.35 million with EPS of Rs.8.06, however, NP margin inched down to 5.21 percent in 2021.
The slowdown of the global economies, rising energy tariff and hiking commodity prices due to Russia-Ukraine war coupled with Pak Rupee depreciation, high indigenous inflation, soaring discount rate and political instability not only halted the new construction projects but also resulted in the closure of ongoing projects. As a result, the overall dispatches of cement industry decreased by 8 percent in 2022. ACPL’s topline registered 3.6 percent plunge in 2022 to clock in at Rs. 20,479.14 million. This came on the back of 32 percent slippage in the total off-take. While local sales posted a meager 6.8 percent rise, export of both cement and clinker drastically fell by 58 percent and 63 percent respectively in 2022. Highest ever coal prices, unprecedented level of electricity tariff, paper bag cost as well as escalated fuel prices pushed down ACPL’s gross profit by 20.25 percent in 2022 with GP margin sliding down to 18 percent. Distribution expense leveled down by 41.24 percent in 2022 on account of significantly lower export related expenses. Administrative expense mounted by 12.8 percent in 2022 on the back of increase in the number of employees from 990 in 2021 to 998 in 2022 coupled with adjustment of minimum wage rate owing to inflation. Other expense ticked up by 9 percent in 2022 in line with increased profit related provisioning. However, it was conveniently offset by 582.93 percent rise in other income on the back of hefty exchange gain on trade receivables as well as dividend income from its subsidiary company, Saqr Al Keetan for Cement Production Company Limited (SAKCPCL). This drove up ACPL’s operating profit by 35.49 percent in 2022 with OP margin climbing up to 12.52 percent. Finance cost shrank by 27.84 percent in 2022 despite high discount rate as ACPL has availed Temporary economic refinance facility, Renewable energy refinance facility, and payroll refinance scheme for most of its long-term loan and export refinance facility for its working capital requirements. The imposition of 10 percent super tax during the year drove up tax expense by 175.19 percent in 2022, resulting in net profit registering 1.29 percent year-on-year rise to clock in at Rs.1121.59 million. EPS stood at Rs.8.16 and NP margin at 5.48 percent in 2022.
ACPL posted a robust 24.41 percent year-on-year topline growth in 2023. Its topline reached Rs.25,477.36 million in 2023. Local cement industry registered 16 percent slump in its off-take in 2023 owing to muted construction activity in the country. This was the consequence of unexpected monsoon spell, highest ever inflation and discount rate, Pak Rupee depreciation, commodity super cycle as well as supply chain disruptions due to diminishing foreign exchange reserves. ACPL’s recorded 14.2 and 30.8 percent deterioration in its local and export sales during the year (see the graph of sales volume). Clinker exports, however, rebounded by 8.4 percent during the year. The company was able to pass on the onus of cost hike to its customers, resulting in gross profit rising up by 53.25 percent in 2023 with GP margin mounting to 22.27 percent. Distribution expense surged by 45.44 percent in 2023 due to higher transportation and port handling charges. Administrative expense also hiked by 13.47 percent in 2023 due to higher payroll expense despite contraction in workforce from 998 employees in 2022 to 961 employees in 2023. Increased provisioning for WWF and WPPF drove up other expense by 61.71 percent in 2023. Conversely, other income marched down by 66.88 percent in 2023 due to lower exchange gain and no dividend earned from SAKCPCL. Operating profit grew by 23.59 percent in 2023 with OP margin slightly ticking down to 12.43 percent. Finance cost spiked by 12.13 percent in 2023 due to higher discount rate. Net profit spiraled by 35.17 percent year-on-year in 2023 to clock in at Rs.1516.06 million with EPS of Rs.11.03 and NP margin of 5.95 percent.
In 2024, ACPL registered 12 percent year-on-year rise in its topline which clocked in at Rs.28,536.53 million. During the year, the overall dispatches of the company ticked up by 13.60 percent to clock in at 2.335 million M tons. This came on the back of clinker exports while local and export sales of cement tapered in 2024. Cost of sales surged by 17.37 percent in 2024 due to high energy cost and inflationary pressure. Cost pressure coupled with lower retention prices due to increased competition and lower demand resulted in 6.70 percent downtick recorded in gross profit in 2024. GP margin also fell to 18.55 percent in 2024. ACPL recorded 37.56 percent higher distribution expense in 2024 due to higher diesel prices, port handling charges as well as implementation of axle load. Administrative expense ticked up by 8.85 percent due to higher payroll expense. This was despite the fact that the number of employees was reduced from 961 employees in 2023 to 941 employees in 2024. Other expense tumbled by 56.65 percent in 2024 due to lower profit related provisioning booked during the year. Other income also contracted by 47.89 percent in 2024 as no exchange gain was recorded during the year. ACPL recorded 37.37 percent lower operating profit in 2024 with OP margin falling down to 6.95 percent. Finance cost surged by 17.51 percent in 2024 due to higher discount rate and increased short-term borrowings to meet working capital requirements. What proved to be the game changer for ACPL in 2024 was the gain of Rs.4289.65 million on gain on disposal of subsidiary recorded in 2024. This represented gain on divestment of 18 million shares of SAKCPCL. Consequently, ACPL posted 135.25 percent growth in its net profit which clocked in at Rs.3566.52 million in 2024. This translated into EPS of Rs.25.95 and NP margin of 12.50 percent.
Recent Performance (9MFY25)
During the nine months of the ongoing fiscal year, ACPL posted year-on-year growth of 9 percent in its topline which clocked in at Rs.23,650.13 million. This was due to 12 percent increase in the company’s overall dispatches which clocked in at 1.983 million M tons in 9MFY25. While local sales posted 10 percent downtick to clock in at 950,617 M tons, export of cement and clinker registered 26 percent growth to clock in at 1,032,611 M tons. During the period under review, the contribution of export sales in the overall sales mix of the company increased to 52 percent versus 46 percent recorded in 9MFY24. Higher contribution of export sales resulted in retention prices lowering by Rs.351 per ton. However, reduction in fuel prices and efficient power mix resulted in 24.33 percent growth in gross profit recorded in 9MFY25. GP margin was recorded at 21.37 percent in 9MFY25 versus GP margin of 18.73 percent recorded in 9MFY24. Higher export sales resulted in 23.28 percent higher distribution expense in 9MFY25. Lower profit related provisioning resulted in 7.81 percent downtick recorded in other expense in 9MFY25. Other income strengthened by 793.47 percent in 9MFY25 on account of interest income on short-term investments made by the company. ACPL recorded 115.63 percent higher operating profit in 9MFY25 with OP margin clocking in at 12.37 percent versus OP margin of 6.25 percent recorded in 9MFY24. During the period under review, the company didn’t record any gain on disposal of subsidiary as it did in the previous year. Moreover, finance cost escalated by 631.21 percent in 9MFY25. This might be due to short-term borrowings obtained during the period. ACPL recorded 40.97 percent diminution in its net profit which clocked in at Rs.1309.63 million in 9MFY25. This translated into EPS of Rs.9.53 in 9MFY25 versus EPS of Rs.16.14 recorded in 9MFY24. NP margin dropped from 10.23 percent in 9MFY24 to 5.54 percent in 9MFY25.
Future Outlook
Macroeconomic stability will support the off-take of cement industry. Increased demand will result in higher retention prices and improved margins. Decline in international fuel prices will also support recovery in construction industry, resulting in increased local demand.
Copyright Business Recorder, 2025