Attock Cement to expand capacity by 1.2 million tons in FY2024

October 31, 2023

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In FY23, the company witnessed a substantial surge in sales revenue, with a YoY increase of approximately 24%, resulting in a total turnover of around PKR 25 billion. This remarkable growth can be attributed primarily to higher retention prices. However, it’s noteworthy that total cement dispatches experienced a YoY decline of roughly 16%. Throughout the year, the company managed to sell 2.1 million tons of cement, even though its production capacity stood at 3 million tons, indicating a surplus capacity of around 30%.

Moving into 1QFY24, the company saw a notable uptick of around 28% in local cement dispatches. This increase is primarily attributed to the low base effect in 1QFY23 due to the impact of floods during that period. The capacity utilization rate during this quarter reached approximately 70%. Additionally, the company has been active in the international market, with the average export price of clinker hovering around USD 30-35 per ton, and the export price for cement at approximately USD 40-42 per ton.

In terms of expansion, the company is gearing up to enhance its production capacity by installing Line-4, which boasts a production capacity of roughly 4,000 TPD. This new line is expected to commence operations by 3QFY24, and a significant portion, about 80%, of the capital expenditure (CAPEX) for this project has already been incurred.

On the energy front, the grid rate during 1QFY24 averaged at about PKR 39 per unit, and the current rate stands at approximately PKR 42 per unit. The company’s power mix comprises 80% from captive generation, including solar and waste heat plants, with the remaining 20% sourced from the grid. The current solar generation capacity is approximately 22MW.

Regarding coal procurement, the average coal inventory cost in 1QFY24 was around USD 115 per ton. The coal mix consists of 80% imported coal and the remaining 20% from local sources. Presently, imported coal prices are around 45-46K per ton, while the current sea freight rate is approximately USD 20 per ton.

In a strategic move, during 1QFY24, the company successfully divested its subsidiary in Iraq, with 50% of the proceeds already received, and the remaining 50% expected in 1HFY25. Looking ahead, the management anticipates that local demand will remain under pressure but expects it to grow by approximately 10% YoY in FY24.