LAHORE - Ever since hitting rock bottom in FY11, Pakistan’s cement sector has witnessed a reversal in fortunes. Improved margin scenario backed by higher retention prices and lower coal cost coupled with reduced interest rate environment reflected positively on sector’s profitability, industry experts observed. During 1HFY13, the sector posted profit growth of 209 per cent to Rs16.4 billion as against Rs5.3 billion during the same period last year. Cement industry experts with Topline Securities have included 15 companies that represent 95 per cent of listed cement companies’ market cap.They said that during the period under review, cement sector posted topline of Rs82.6 billion as against Rs68.0 billion in the same period last year, depicting growth of 21 per cent. The prime growth driver remained 17 per cent escalation in price of the commodity as est. net retention prices rose to Rs310 per bag verses Rs266 in 1HFY12. In addition, 4 per cent volumetric variance also played its due role with high margin domestic dispatches rising by 10 per cent. Exports on the other hand declined by 7 per cent. Support to profitability also came from 24 per cent decline in coal prices that account 40 per cent for sector’s production cost. Subsequently, gross margins improved by significant 9pps to 36 per cent in 1HFY13 as against 27 per cent in same period last year. Lastly, reduced interest rate also boded well for sector’s profitability. As 450bps reduction in the policy rate by central bank from June 2011 culminated into 32 per cent reduction in the financial charges of the sector to Rs4.2 billion. Reduction in financial charges coupled with follow through impact of topline growth has strengthened sector’s interest coverage ratio to 6x.Among all participants, big players like DGKC, BWCL and LUCK stood out, having cumulative share of 57 per cent of sector’s bottom-line. Profitably of DGKC grew by 128 per cent or Rs1.6 billion, while BWCL post bottom-line growth of 202 per cent or Rs1.4 billion and Luck’s profits were up by 42 per cent or Rs1.2 billion. However, MLCF and FCCL remained the prime performers successfully turned their respective losses of Rs223m and Rs50m during same previous year into profits of Rs1.4 billion and Rs0.9 billion respectively during 1HFY13.