News
Pakistan Cement Sector Profit Hits Record Rs108.5bn as Construction Demand Improves
By Mariam Khan
Real Estate Analyst
4 min read
Pakistan's listed cement companies posted a combined net profit of Rs108.5 billion in FY2025-26, an 18 percent increase from Rs91.73 billion the previous year, crossing the Rs100 billion mark for the first time. Total cement offtake among covered companies rose 5 percent to 32.28 million tonnes, up from 30.78 million tonnes, while combined sales increased 7 percent to Rs494.2 billion from Rs462.67 billion.
What Actually Drove the Improved Profitability
Higher cement offtake, stronger other income, and lower finance costs together supported this year's profit growth. Gross profit rose 7 percent to Rs169.09 billion, with the sector's gross margin improving slightly to 34.2 percent from 34.0 percent the previous year, driven by higher offtake volumes and selling prices, though rising coal prices and transportation costs limited how much further that margin could improve. Other income rose by around 20 percent during the year, with companies increasing their cash and short-term investment holdings by 37 percent to a record level, itself a meaningful contributor to overall sector earnings beyond core cement sales alone.
What This Looked Like at the Company Level
Lucky Cement, one of Pakistan's largest listed cement producers with roughly 15.3 million tonnes of annual manufacturing capacity across plants in Pezu, Nooriabad, and Jamshoro, reported earnings crossing Rs96 billion for the fiscal year, with the company separately declaring a cash dividend alongside its results. Domestic volumes at Lucky Cement specifically increased 11 percent to 6.52 million tonnes during the year, a meaningfully faster domestic growth rate than the sector's overall 5 percent offtake increase, suggesting the company outperformed the broader industry on the domestic side specifically even as export markets showed separate dynamics.
Why Lower Financing Costs Mattered This Year Specifically
Reduced finance costs supporting cement producer profitability this year reflects the broader decline in Pakistan's policy rate from its 2024 peak, which lowered borrowing costs for cement companies carrying debt tied to plant capacity and operations. This connects cement sector profitability directly to the wider monetary policy environment, meaning any future direction in the policy rate carries relevance for this specific sector's margins going forward, not just for property developers and mortgage borrowers more commonly associated with interest rate discussion.
Why Rising Coal and Transportation Costs Are the Genuine Counterweight
Even with record sector profit, the specific mention of coal price and transportation cost pressure limiting margin improvement is a meaningful qualifier worth taking seriously. Cement production is genuinely energy intensive, and continued volatility in coal prices and fuel driven transportation costs represents an ongoing, structural cost pressure the sector must continue managing even during a year of record headline profitability.
What This Signals About Underlying Construction Demand
A 5 percent rise in cement offtake alongside a 7 percent increase in sales value points to genuinely improved construction sector demand during the fiscal year, since cement consumption is one of the more direct, physical indicators of actual building activity taking place nationally, distinct from more abstract measures like approved project counts or announced investment figures. This offtake growth is relevant context for anyone assessing the health of Pakistan's broader construction and property development sector during this period.
What Remains to Be Seen
Whether this improved profitability and offtake growth continues into the current fiscal year depends heavily on whether coal and transportation cost pressures ease or intensify further, alongside the trajectory of Pakistan's policy rate, given how directly lower finance costs contributed to this year's result. Given the demonstrated volatility in both fuel prices and monetary policy discussed elsewhere this year, sustained continuation of this specific profit growth rate should not be assumed automatically.
What This Means for Construction and Real Estate
Rising cement offtake is a genuinely useful, concrete signal of improving construction activity nationally, relevant to developers, contractors, and property investors gauging the broader health of Pakistan's building sector beyond individual project announcements. Given that lower financing costs contributed meaningfully to this year's cement sector result, any future increase in the policy rate could pressure cement producer margins in a manner that may eventually feed into cement pricing, a factor construction cost planning should account for going forward. Property developers and contractors should treat this offtake growth as a positive, if qualified, signal for construction sector momentum, while remaining aware that coal and transportation cost pressures remain a genuine, ongoing constraint on the sector's cost base regardless of overall profitability.