{"id":9340,"date":"2025-05-23T13:12:59","date_gmt":"2025-05-23T08:12:59","guid":{"rendered":"https:\/\/ksestocks.com\/blog\/?p=9340"},"modified":"2025-05-23T13:13:05","modified_gmt":"2025-05-23T08:13:05","slug":"can-power-cement-keep-the-profits-flowing-as-renewable-energy-takes-hold","status":"publish","type":"post","link":"https:\/\/ksestocks.com\/blog\/can-power-cement-keep-the-profits-flowing-as-renewable-energy-takes-hold\/","title":{"rendered":"Can Power Cement keep the profits flowing as renewable energy takes hold?"},"content":{"rendered":"\n<h2 class=\"wp-block-heading\">Key takeaways:<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Rs316mn profit<\/strong> in 3QFY25 vs. <strong>Rs717mn loss<\/strong> in 3QFY24<\/li>\n\n\n\n<li>9MFY25 profit at <strong>Rs349mn<\/strong> vs. <strong>Rs1.2bn loss<\/strong> in same period last year<\/li>\n\n\n\n<li><strong>Gross margins improved to 28%<\/strong>, up from 22% in FY24<\/li>\n\n\n\n<li>Fuel cost reductions, use of alternative energy, and margin expansion to support outlook<\/li>\n\n\n\n<li>South region market share at <strong>19%<\/strong>, with stronger exports and retention pricing<\/li>\n<\/ul>\n\n\n\n<p><strong>Power Cement Ltd (<a href=\"https:\/\/ksestocks.com\/blog\/tag\/power\/\" target=\"_blank\" rel=\"noopener\" title=\"POWER\">POWER<\/a>)<\/strong> has posted a sharp turnaround in 3QFY25 earnings, reporting a <strong>Rs316 million<\/strong> profit compared to a <strong>Rs717 million loss<\/strong> in the same quarter last year. Over the nine-month period, the company swung to a <strong>Rs349 million<\/strong> profit, reversing a <strong>Rs1.2 billion<\/strong> loss in 9MFY24. The improvement reflects a mix of cost efficiency gains, reduced fuel costs, and margin preservation despite lower sales volumes.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Sales dip, margins surge<\/h2>\n\n\n\n<p>Sales revenue in 3QFY25 dropped by <strong>16% YoY<\/strong>, mainly due to an <strong>18.9% decline in dispatches<\/strong>. However, the gross margin improved by <strong>5.6 percentage points<\/strong>, reaching <strong>28%<\/strong>, thanks to strategic cost-saving measures and a favorable fuel mix.<\/p>\n\n\n\n<p>The company benefited from <strong>global coal prices falling to around US$100\/ton<\/strong> (landed cost at Karachi Port), with a higher share of <strong>U.S. coal and cheaper alternative fuels<\/strong> that now make up <strong>10\u201320%<\/strong> of the fuel mix. These alternative fuels are <strong>25\u201330% cheaper<\/strong> than imported coal, giving POWER a strong cost advantage.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Energy strategy: lower costs ahead<\/h2>\n\n\n\n<p>Power Cement consumes <strong>28MW of electricity<\/strong>, with <strong>40% sourced internally<\/strong> and the rest purchased from HESCO at <strong>Rs35\/kWh<\/strong>, translating to an average energy cost of <strong>Rs26\u201328\/kWh<\/strong>. This high reliance on expensive grid electricity is set to improve, as the company\u2019s <strong>wind power plant is expected to come online in 2H of FY26<\/strong>.<\/p>\n\n\n\n<p>Under a <strong>20-year rental agreement<\/strong>, the wind project will contribute <strong>11%<\/strong> to the total energy mix, operating at <strong>39% efficiency<\/strong>\u2014a move that should substantially reduce power costs in the medium term.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Exports and local market dynamics<\/h2>\n\n\n\n<p>International markets have played a key role in profitability this quarter. Export prices have risen, with:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Clinker at US$35\u201337\/ton<\/strong><\/li>\n\n\n\n<li><strong>Cement at US$44\u201346\/ton<\/strong><\/li>\n<\/ul>\n\n\n\n<p>This was driven by robust African demand. On the domestic front, <strong>retention prices are up to ~Rs15,000\/ton<\/strong>, helped by price hikes in the Southern region where POWER commands a <strong>19% market share<\/strong>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Capital and future outlook<\/h2>\n\n\n\n<p>Management noted <strong>74.35 million preference shares<\/strong> outstanding after recent conversions. Payouts on these are expected to resume once cash flow stabilizes.<\/p>\n\n\n\n<p>Looking ahead, the company expects:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Margins to remain strong due to <strong>continued cost efficiency and renewable investments<\/strong><\/li>\n\n\n\n<li>Further <strong>increase in alternative fuels<\/strong> (targeting 20%)<\/li>\n\n\n\n<li>Cement demand to grow <strong>7\u201310% annually<\/strong>, driven by pent-up Southern demand<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Financial highlights<\/h2>\n\n\n\n<figure class=\"wp-block-table is-style-stripes\"><table class=\"has-fixed-layout\"><thead><tr><th>Metric<\/th><th>FY23<\/th><th>FY24<\/th><th>9MFY25<\/th><\/tr><\/thead><tbody><tr><td>Sales (Rs mn)<\/td><td>28,939<\/td><td>31,077<\/td><td>21,004<\/td><\/tr><tr><td>YoY Sales Growth<\/td><td>+65%<\/td><td>+7%<\/td><td>-16%<\/td><\/tr><tr><td>Gross Margin (%)<\/td><td>24%<\/td><td>22%<\/td><td>28%<\/td><\/tr><tr><td>Profit After Tax (Rs mn)<\/td><td>169<\/td><td>(2,703)<\/td><td>349<\/td><\/tr><tr><td>EPS (Rs)<\/td><td>0.14<\/td><td>(2.27)<\/td><td>0.29<\/td><\/tr><tr><td>P\/E (x)<\/td><td>29.18<\/td><td>NM<\/td><td>34.87<\/td><\/tr><tr><td>Dividend Yield (%)<\/td><td>0%<\/td><td>0%<\/td><td>0%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>Power Cement has staged a financial recovery in FY25, supported by lower fuel costs, a strategic energy mix shift, and improving export pricing. While sales volumes remain under pressure, rising margins and operational efficiency indicate a <strong>positive earnings trajectory<\/strong> going forward. With renewable energy integration and demand recovery in the South, <strong>POWER appears to be entering a more stable and potentially profitable phase<\/strong>.<\/p>\n\n\n\n<p><strong>Source: JS Global<\/strong><\/p>\n\n\n\n<p>!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Power Cement Ltd (POWER) has posted a sharp turnaround in 3QFY25 earnings, reporting a Rs316 million profit compared to a Rs717 million loss in the same quarter last year. Over the nine-month period, the company swung to a Rs349 million profit, reversing a Rs1.2 billion loss in 9MFY24. The improvement reflects a mix of cost efficiency gains, reduced fuel costs, and margin preservation despite lower sales volumes.<\/p>\n","protected":false},"author":9252,"featured_media":6972,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[154,138],"tags":[238],"class_list":["post-9340","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-analysis","category-financials","tag-power"],"featured_image_src":{"landsacpe":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2024\/11\/POWER-STOCK-PSX-1140x445.png",1140,445,true],"list":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2024\/11\/POWER-STOCK-PSX-463x348.png",463,348,true],"medium":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2024\/11\/POWER-STOCK-PSX-300x188.png",300,188,true],"full":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2024\/11\/POWER-STOCK-PSX.png",1920,1200,false]},"_links":{"self":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts\/9340","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/users\/9252"}],"replies":[{"embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/comments?post=9340"}],"version-history":[{"count":1,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts\/9340\/revisions"}],"predecessor-version":[{"id":9341,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts\/9340\/revisions\/9341"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/media\/6972"}],"wp:attachment":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/media?parent=9340"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/categories?post=9340"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/tags?post=9340"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}