Presentation On Pioneer Cement (business Recorder)

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

• A declining trend • Price wars • Decreased profits despite of increased demand • Rising operating expenses * Price of fuel * Packaging material

35 30 25 20 15 10 5 0 -5 Jun '04 Jun '05 Jun '06 Jun '07 Jun '08 Gross Profit Margin

Profit Margin

50 40 30 20 10 0 -10

Jun '04

Jun '05

Jun '06

ROA

Jun '07 ROCE

Jun '08

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

Inventory Turnover Operating Cycle DSO

'06

'07

'08

Days to sell avg inv TATO

• Marked increase in inventory turnover

Liquidity • Worsening liquidity position * Substantial rise in current liabilities

Current Ratio 1.2 1 0.8

• Liquidity crunch * Price wars

0.6 0.4 0.2 0

• Issued bonds to restructure debt

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

% of current assets Cash and bank balances Trade debts inventory

2007

2008 32

18

3

5

16

9

Debt Management • Increasingly financed by equity FY 04

FY 08

87% assts by debt

56%

• Debt to equity has declined in FY’08 * Fall in debt due to restructuring

7 6 5 4 3 2 1 0

'04

'05

'06

'07

'08

debt to asset 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