Cement Industry Posts Robust Q1FY26 Gains as Domestic Demand and Cost Efficiencies Drive Performance

Pakistan’s cement sector has kicked off FY26 with a powerful performance, recording a 34% year-on-year surge in profitability for the first quarter, according to Topline Securities. The industry’s total earnings are projected to reach Rs. 20.6 billion, marking a 10% quarter-on-quarter increase from Rs. 18.8 billion in Q4FY25.

This upswing is attributed to strong domestic dispatches, declining coal prices, and lower finance costs. Domestic cement dispatches rose 14% YoY and 2% QoQ, while exports dipped 3% QoQ to 2.59 million tons but remained 21% higher YoY. Overall dispatches hit 12.1 million tons, a 16% YoY increase, with sector utilization at 57.5%—North at 51% and South at 79%, the latter buoyed by export strength.

Key financial highlights for Q1FY26:

• Gross margins expected at 36%, up 12.5 percentage points YoY, driven by cheaper coal.
• Richards Bay coal averaged US$90/ton, down from US$110/ton last year.
• Net sales projected to rise 10% YoY to Rs. 103 billion.
• Finance costs anticipated to drop 47% YoY and 3% QoQ, aided by lower interest rates and subsidized debt.

Company-wise performance:

• Lucky Cement (LUCK) leads with Rs. 15.6/share earnings, up 27% YoY and 16% QoQ.
• DG Khan Cement (DGKC) sees a 211% YoY jump to Rs. 5.73/share, fueled by dispatch growth.
• Maple Leaf Cement (MLCF) posts Rs. 2.93/share, a 129% YoY increase, thanks to strong sales and reduced finance costs.
• Fauji Cement (FCCL) records Rs. 1.56/share, up 18% YoY, supported by renewable energy adoption.
• Kohat Cement (KOHC) may experience a 9% YoY dip to Rs. 3.19/share, though margins are expected to improve to 38% due to lower coal costs.

The sector’s strategic shift toward alternative fuels and renewables is also helping reduce reliance on imported energy, further strengthening its cost structure.