Capacity utilisation of cement sector reached its nadir – at 69.67 per cent – of the past decade, in the first two quarters of 2011-12 that ended on December 31, 2011. Whereas, exports continue to decline and in turn offsetting the gains in local consumption.
NIGHTMARES
Cement industry did not end the year 2011 on a very encouraging note. Capacity utilisation of the industry stood at 81.53 per cent in 2007-08 that has gradually declined to its present level, giving nightmares to the cement manufacturers. “The expected turnaround in the economy did not materialise as the capacities of the sector continue to increase,” said a spokesman of All Pakistan Cement Manufacturers’ Association (APCMA).
HAVOC
He said expansions in cement sector were planned six years back when the economy was moving. The prolonged recession of recent years and drying of government development programs have played havoc with viability of cement sector.
DOMESTIC DECEMBER DEMAND
He said domestic demand in December was encouraging, showing a growth of over 13 per cent. This compensated to some extent the decline of 5.12 per cent in local demand in November. He said exports, however, remained under pressure during the last six months posting decline in four of the last six months. Exports declined by over eight per cent in December. Overall decline in exports stood at 4.58 per cent during July-December 2011 period.
NORTH VERSUS SOUTH
Cement units located in South registered a healthy growth of 19.2 per cent in the local market but posted even higher 20.02 per cent decline in exports in the first six months of this fiscal year. The majority of the cement capacity however is located in the northern part of the country where the industry posted a modest gain of six per cent in domestic market and even lower increase of 2.51 per cent in exports.
Total cement dispatches in the first two quarter of this year was 15.40 million tonnes which was 4.21 per cent higher than the cement dispatches of 14.78 million tonnes during corresponding period last year.
DAUNTING NUMBERS
During the first quarter of current fiscal year, seven cement units suffered loss before taxation aggregating to Rs0.973 billion while eight cement units, of which three are located near Karachi in close proximity to the sea port, earned profit of Rs1.001 billion. At the end of last fiscal, industry debts to financial institution amounted to a staggering Rs125.3 billion while equity was Rs114 billion.
