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Cherat Cement Company Limited (CHCC) has navigated industry challenges and rising energy costs through strategic investments and efficiency measures, strengthening its liquidity and role in Pakistan’s construction sector, reports WealthPK.

Amid rising gas tariffs and the implementation of the captive levy, the company has achieved notable savings in combustion costs through efficient procurement and process optimisation. Furthermore, it has shifted its power mix from gas-based captive power to more cost-effective sources, including an expansion of solar energy capacity to offset higher energy expenses.

Pakistan's macroeconomic outlook has begun to stabilise, with easing inflation, a steady exchange rate, and lower policy rates. However, the cement sector saw a 1.5% dip in overall demand, with domestic sales falling 6.5% due to sluggish construction activity and rising input costs.

Despite this, the company’s strong export performance, marked by a 27.1% rise in sea-based exports, helped cushion the impact. In 9MFY25, the company’s revenue declined by 3%, but it achieved a 13% reduction in the cost of sales through process enhancements and a shift to more affordable alternatives and renewable energy sources.

Moreover, the company’s liquidity improved during the period, driven by higher other income from increased investments in mutual funds. Strong cash flows and early repayment of long-term loans led to a 55% decline in finance costs. As a result, short-term investments rose from Rs2.5 billion to Rs8.6 billion, while cash and bank balances increased from Rs429 million to Rs608 million.

Additionally, the company has reduced reliance on gas-based captive power and is expanding the use of cost-effective alternatives, particularly solar energy. A key step in this transition was the commissioning of a 6MW solar power plant, with an additional 3MW set to become operational soon. This shift not only helps mitigate exposure to energy price volatility but also supports the company’s sustainability goals, enhancing its appeal to investors and positioning it for future growth.

Looking ahead, the company foresees moderate growth in domestic cement demand, driven by a pickup in construction activity. Lower interest rates are also expected to improve access to financing, encouraging infrastructure and housing investments.

Therefore, CHCC continues to focus on long-term value through investments in process efficiency, renewable energy, and working capital optimisation. The company has urged the government to support domestic construction and ensure smooth export operations at key borders such as Afghanistan to maintain growth momentum.

Credit: INP-WealthPk