Pioneer Cement Limited

Analysis of Financial Statements Financial

Year 2004 - 2001 Q Financial Year 2009

PRESENTED TO: MS MEHREEN FURQAN

PRESENTED BY: MISBAH KANWAL
 Overview
• incorporated on 9th February 1986 as a
public limited company
• medium sized company
• underwent many expansion plans
• products include
* ordinary portland cement
* sulphate resistant cement (ideal for construction
in or near sea)
 Industry Trends

• FY’08: impressive growth in cement sector

• 1QFY’09: 0.7% growth
* Local dispatches decreased
¤ Slow economic activity
* Exports grew
¤ Real estate boom in Middle East
¤ Reconstruction process in Afghanistan
• Exports contributed towards growth
 Profitability
40
35

• A declining trend 30
25

• Price wars 20
15

• Decreased profits 10
5

despite of increased 0
-5

demand Jun '04 Jun '05 Jun '06 Jun '07 Jun '08

Gross Profit Margin Profit Margin

• Rising operating 50

expenses 40

30
* Price of fuel 20

* Packaging material 10

0
Jun '04 Jun '05 Jun '06 Jun '07 Jun '08
-10

ROA ROCE
 Recent Results

• Transportation costs higher by 195%

• Higher finance costs (increase in KIBOR)
• Depreciation of the rupee
* Exchange loss
• GP was 843% higher (1QFY09)
* Net sales went up by 75%
* Cost of sales up by 35%
• Overall profit
 Asset Management
70
60
50
40
30
20
10
0
'04 '05 '06 '07 '08

Inventory Turnover Days to sell avg inv

Operating Cycle TATO
DSO

• Marked increase in inventory turnover

 Liquidity

• Worsening liquidity
position Current Ratio
* Substantial rise in 1.2
current liabilities 1

0.8
0.6
• Liquidity crunch 0.4
* Price wars 0.2

0
Jun '04 Jun '05 Jun '06 Jun '07 Jun '08
• Issued bonds to
restructure debt
% of current 2007 2008
assets
Cash and bank 32 18
balances
Trade debts 3 5

inventory 16 9
 Debt Management

• Increasingly financed 7
by equity 6
5
FY 04 FY 08
4
87% assts 56%
3
by debt
2
1
• Debt to equity has 0
declined in FY’08 '04 '05 '06 '07 '08

* Fall in debt due to debt to asset

restructuring debt to equity
long term debt to equity
• The strategy of reducing debt should be
beneficial because of rising interest rates
 Future Outlook

• Increase in excise duty on cement (budget

2009)
* To be passed on to consumers
* No expected effect on profits
• Decrease in local demand expected
* Higher GST; increased price
* Inflation
• Production Costs expected to increase
* Energy crisis
* Effect on profit
• Exports should remain stable, or to
increase
* Boost margins of the industry
* Reduce negative impact on profitability