Lucky: Bigger leagues

It is not just that Lucky’s revenue streams have now crossed Rs100 billion, because so has Bestway’s, the other major cement manufacturer, but it is also that Lucky maintained that momentum and managed to double its earnings. In FY24, Lucky’s Rs115 billion revenues came with unconsolidated after-tax earnings of Rs28 billion, compared to Bestway’s Rs104 billion during the year earning half of that in profits. This is impressive as it comes at a time when the cement industry is at a standstill in terms of volumes. Domestic dispatches industry-wide fell 5 percent in FY24, only to get bolstered by exports (up 56%), bringing the total sales up by 1.6 percent.

That is not to say Lucky was unlucky in terms of volumes, despite cement demand remaining belligerently patchy during the year. Final numbers are not published by the company yet, but 9M financials suggest, Lucky’s volumes grew 18 percent compared to last year; exports were 22 percent of total sales. Estimated volumes during the whole year are up 16 percent. Though cement prices have catapulted in the past month, most price hikes were witnessed in the northern zone of the country. Lucky’s estimated revenue per ton sold reflects that—up 4 percent in FY24 from last year. But Lucky also managed to keep a tight lid on its costs. Comparatively, its cost of goods sold per ton fell by 5 percent. Again, these are estimated numbers but 9M financials published by the company would corroborate this.

There is much to celebrate for the company as gross margins and net margins are the highest in six years, while overheads and finance costs are more than covered by other income (overheads are 9% of revenues, finance costs 1%, and other income, 14%). In fact, other income buttressed the bottom line by 40 percent. Strong gross profit and other income-covering for expenses allowed the profitability growth of 105 percent, after a tax of 32 percent.

By no means, Lucky is a novice at this business. It is one of the largest conglomerates in the country with hands in many different baskets. Its cement manufacturing business is supported by its investments in several ways, and it enjoys a market presence and influence that is enviable. But even as it stands tall amidst peers, much has worked for the cement industry this year than gone wrong, and that is a dynamic that continues to work for cement makers, rain or shine.