Cherat Cement Reports 6% Growth in Quarterly Profit Despite Decline in Sales Volumes

Cherat Cement Company Limited (CHCC) has reported a 6% increase in net profit for the first quarter ended September 30, 2026, demonstrating financial resilience despite challenges facing Pakistan’s cement industry, including higher energy costs, supply-chain disruptions and the continued closure of the Afghan border.

According to the company’s unaudited financial results, net profit increased to Rs. 2.22 billion, compared with Rs. 2.10 billion in the corresponding quarter of the previous year. Earnings per share (EPS) also improved to Rs. 11.44 from Rs. 10.79.

The company’s net turnover reached Rs. 10.51 billion during the quarter, up approximately 2% from Rs. 10.29 billion recorded in the same period last year. Gross profit stood at Rs. 3.76 billion, compared with Rs. 3.74 billion previously.

One of the major factors supporting profitability was a significant reduction in financing expenses. Finance costs declined by 51% to Rs. 46.95 million, primarily due to the repayment of long-term loans and export refinance facilities. This reduction helped improve the company’s bottom line despite increasing operating costs.

Domestic Sales Support Performance

Cherat Cement’s sales volumes remained under pressure during the reporting period. Total sales volume declined by 15% to 595,328 tonnes compared with 700,350 tonnes in the corresponding quarter last year.

Domestic cement dispatches, however, increased by 7% to 581,276 tonnes from 543,061 tonnes, reflecting improved demand in the local market. The increase was supported by infrastructure development initiatives, housing finance schemes and a gradual recovery in construction activity.

The absence of export sales was a major challenge. The company recorded no cement exports during the quarter, compared with 157,289 tonnes in the same period last year, mainly because of the continued closure of the Afghan border. Domestic clinker sales of 14,052 tonnes partially contributed to the overall sales volume.

At the industry level, total cement dispatches increased by 4% year-on-year, with domestic sales rising 8%. However, industry exports declined by 11%, while sea-based exports registered growth of 19%.

Rising Energy Costs Remain a Challenge

The company faced higher production expenses during the quarter. Cost of sales increased by 3% to Rs. 6.75 billion, mainly due to higher fuel and electricity prices, along with increased raw material and packing costs.

To manage these pressures, Cherat Cement continued optimising its fuel and power mix through greater utilisation of local coal and renewable energy. Operational efficiency and cost-control measures also remained important priorities.

Despite these challenges, operating profit improved to Rs. 3.55 billion from Rs. 3.51 billion in the corresponding period last year.

Diversification and Renewable Energy Initiatives

Cherat Cement is also pursuing business diversification as part of its long-term growth strategy. The company has published a Public Announcement of Intention to acquire at least a 30% stake in Nimir Industrial Chemicals Limited (NICL). The proposed transaction is progressing, with further developments to be communicated to shareholders.

In addition, the company’s Battery Energy Storage System (BESS) and solar energy project is slightly behind schedule but is expected to be completed during the first quarter of 2027. Additional solar capacity is expected to become available before the end of 2026.

These initiatives are aimed at improving energy efficiency, reducing exposure to rising electricity costs and strengthening the company’s competitive position.

Strong Liquidity and Financial Position

The company’s financial position also showed improvement. Total assets increased to Rs. 56.62 billion as of September 30, 2026, compared with Rs. 52.29 billion at the end of June 2026.

Cash and cash equivalents, including short-term investments, stood at Rs. 16.40 billion, compared with Rs. 12.29 billion at the beginning of the financial year.

Net cash generated from operating activities reached Rs. 4.98 billion during the quarter, compared with Rs. 3.93 billion in the same period last year, indicating improved cash generation.

Furthermore, the company’s long-term financing declined to Rs. 2.08 billion from Rs. 2.16 billion at June 30, 2026.

Outlook Remains Cautiously Optimistic

Looking ahead, Cherat Cement expects Pakistan’s cement industry to benefit from improving domestic demand, infrastructure investment, housing projects and reconstruction activities.

However, international fuel price volatility, geopolitical tensions in the Middle East, inflationary pressures and disruptions in trade with Afghanistan remain significant risks.

The company plans to maintain its focus on cost leadership, operational excellence, prudent financial management and disciplined investment. It will also continue exploring alternative fuels, coal-mix optimisation, renewable energy and diversification opportunities.

Overall, Cherat Cement’s first-quarter results reflect improved profitability and stronger cash generation despite lower sales volumes. Reduced finance costs, higher domestic dispatches and ongoing efficiency initiatives helped the company deliver a better financial performance, while its proposed investment in Nimir Industrial Chemicals and renewable energy projects could support its long-term growth strategy.

Source: Cherat Cement Company Limited – First Quarterly Report for the period ended September 30, 2026.