Cement despatches are rising, both for domestic consumption and exports, since the resumption of business activities following the decline in the coronavirus infections in June. The sales rose by almost a fifth to 19.3 million tonnes during the first four months of the present financial year to October from a year ago, according to the cement manufacturers’ association data. Domestic consumption grew by 17.9 per cent to 15.7m tonnes as overseas shipments surged by 29.1pc to 3.6m tonnes.
The industry, which had suffered a cumulative loss of Rs13bn — including the Covid-19 related loss of Rs4.7bn — in the last fiscal year owing to the addition of 1.5m tonnes in new capacity and shrinking demand, has seen its profitability return this year as the retention prices increase, excise duty is cut by Rs25 per bag to Rs75 and sales spike. Besides, the reduction in interest rates has significantly lowered the manufacturers’ financial costs that had been a major drag on their margins. There has been a visible improvement in the top and bottom lines of the cement companies even if the firms located in the north of the country are still earning modest margins owing to lower retail prices when compared with the ones in the south — Sindh and Balochistan.
Though the published data on industrial output for the first quarter of the present fiscal year indicates broad-based recovery of 4.8pc in large scale manufacturing after a contraction of over 10pc last year, the uptick in cement despatches is being showcased by the government as a major sign of an economic turnaround in the country following a crushing slowdown during the last two years under the Pakistan Tehreek-i-Insaf government. Analysts argue the sudden surge in the factory output is a result of a pick-up in the economic activities after the removal of the Covid-19 restrictions and pent-up demand from the last quarter of the previous fiscal year.
source: Dawn.com
