LAHORE - The Board of Directors of Lucky Cement Limited is scheduled to meet on January 28, 2013 to approve the financial accounts of 1HFY13. It is expected the company to post profit after tax of Rs 2,238 million in 2QFY13, an 11 per cent QoQ jump, which is estimated to take 1HFY13 earnings to PKR 4,252mn, a hefty 41 per cent YoY increase. The AHL experts stated that this is expected mainly on account of firm cement prices (15 per cent up YoY) coupled with falling coal prices (23 per cent drop YoY), combined effect of which is estimated to yield exuberant gross margins of 44 per cent in 1HFY13 compared to 38 per cent in the same period last year. In addition to this, a massive 81 per cent YoY fall in finance cost is expected to provide further impetus to the bottom line. Top line of the company is expected to jump by a 15 per cent YoY to PKR 17.7bn in 1HFY13. This growth primarily to come from a 15 per cent YoY jump in average retention prices as dispatches are expected to remain flat around 2.8mn tons during 1HFY13.

Coal price during 1HFY13 has dropped by a massive 23 per cent YoY, however its full impact would be more visible in 2HFY13, when the expensive coal inventory would have been utilised. Even the meagre impact of falling coal prices coupled with firm cement prices is expected to take 1HFY13 gross margin up by 6ppt to 44 per cent compared to 38 per cent a year back. LUCK has aggressively reduced its leveraging during FY12 to just a 1.6 per cent of total assets compared to 17.5 per cent at the start of FY12. The company completely paid off its short term borrowing of 6.3bn during the year.

This is expected to reduce its finance cost by a hefty 81 per cent YoY to Rs32m.