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Kohat Cement Company Limited (KOHC) has emerged as a standout in Pakistan’s struggling cement sector, achieving strong profit growth through strategic energy initiatives and effective pricing, reports WealthPk.

During the nine months ending March 31, 2025, Pakistan’s cement industry faced significant challenges, with total dispatches declining by 1.5% year-on-year (YoY) amid reduced public sector development and rising construction costs. Similarly, domestic sales dropped 6.6%, though export volumes offered some relief with a 28.1% YoY increase, supported by favorable regional demand and currency trends.

As a result, KOHC faced the impact of the sector slowdown, recording a 12.4% decline in total dispatches, driven by an 11.7% fall in domestic volumes. In response, the company prioritized margin protection and operational efficiency to navigate the downturn. Therefore, KOHC is developing a 30MW coal-fired power plant at its Kohat facility, with construction underway and commissioning expected by the end of the next financial year.

The new plant represents KOHC’s strategic move to lower energy costs and reduce its reliance on the unstable national grid, building on its success in cutting production costs through local coal and renewable energy. During 9MFY25, gross profit jumped 41.2% year-on-year to Rs12 billion, while gross margins rose to 41.65%, highlighting the success of KOHC’s energy strategy in shielding operations from external pressures and cost volatility.

Despite a decline in sales volumes, KOHC successfully offset the impact through a proactive pricing strategy, which played a key role in sustaining revenue and supporting profit growth in a subdued market. As a result, net profit rose sharply by 41.6% YoY to Rs9.2 billion, with earnings per share increasing to Rs47.08 from Rs33.11. This strong financial performance was further supported by robust returns from KOHC’s investment portfolio, reflecting its diversified approach to value generation.

KOHC’s improved efficiency and margin growth are contributing to the local economy, with its new power plant and expansion projects generating direct and indirect employment in Kohat and nearby areas. Additionally, KOHC enhances energy security for the industrial sector, potentially easing the strain on national infrastructure by lowering its reliance on the national grid. Moreover, the company’s increased use of local coal supports the domestic mining industry, while its capital investments in machinery and equipment stimulate activity across related sectors.

Improved profitability also leads to higher tax contributions, providing a timely boost to government revenues amid fiscal challenges. Despite current challenges in the construction sector, KOHC remains focused on long-term growth, progressing with infrastructure development for a new greenfield cement production line in Khushab, Punjab. Once conditions in the construction industry improve, the import of machinery will proceed, positioning the company to meet future demand as the economy recovers.

As the sector stabilizes and public spending resumes, KOHC’s integrated strategy of energy self-sufficiency, pricing flexibility, and disciplined capital allocation will drive sustainable growth. Therefore, KOHC is advancing steadily, setting new benchmarks in Pakistan’s cement industry, with its power project nearing completion and a pipeline of investments.

Credit: INP-WealthPk