Still strong: Cherat Cement posts profit despite drop in exports

Drop in demand in Afghanistan and India has hurt exports of the entire sector. PHOTO: REUTERS/FILE

KARACHI: 

Cherat Cement posted a profit after tax of Rs710 million in the six months ended December 31, 2013, up 17% compared to Rs607 million in the corresponding period of previous fiscal year.

Earnings per share (EPS) jumped to Rs7.43 compared to Rs6.35 earlier. The company announced a cash dividend of Rs1 per share.

On a quarterly basis, Cherat Cement recorded a profit of Rs437 million, or EPS of Rs4.57, in the quarter ended December 31, 2013 compared to Rs339 million or EPS of Rs3.54 in the corresponding quarter of previous year.

In fiscal year 2012-13 (FY13), the company had reported a record profit of Rs1.22 billion, up 181% from Rs436 million in FY12.

Cherat is a small-cap cement company with a capacity of 1.1 million tons, but it has an added advantage of being close to the Afghan border. Its factory is located near Nowshera, Khyber-Pakhtunkhwa, which was built on a land bordering Cherat Hills − the company’s source of high-quality limestone.

This gives it an edge in exports to Afghanistan and India, two of the cement industry’s major export destinations.

Like other cement manufacturers, Cherat Cement made significant gains in the last two years because of a considerable increase in cement prices and low international coal prices.

However, like other manufacturers in the north of Pakistan, the recent decline in exports to Afghanistan and India due to security and political uncertainties is causing trouble for the company.

Demand in Afghanistan also diminished recently as Nato forces began the drawdown. Moreover, continuous availability of cheaper Iranian cement in Afghanistan is also giving Pakistani cement makers tough time.

Along with Afghanistan, a slowdown in the Indian economy, coupled with non-tariff barriers, also led to reduced demand for cement in India.