Bestway Cement Limited: performance and outlook

Bestway Cement Limited (PSX: BWCL) was incorporated in Pakistan as a public limited company in 1993. The company is engaged in the manufacturing and sale of cement. BWCL is the subsidiary of Bestway International Holdings limited (BIHL) which holds 56. 43 percent shares of BWCL. BICL is the subsidiary of Bestway Group Limited (BGL) which is the ultimate parent company of BWCL. Pattern of Shareholding As of June 30, 2026, BWCL has a total of 596. 253 million shares outstanding which are held by 12190 shareholders. 60. 34 percent of the company’s shares are held by its Associated Companies, Undertakings and Related Parties which also include its holding company, Bestway International Holdings Limited (BIHL) owning 56. 43 percent shares. Local General Public accounts for 26. 14 percent of BWCL’s shares followed by Directors, CEO, their spouse and minor children with a stake of 12. 34 percent in the company. The remaining shares are held by other categories of shareholders. Historical Performance (2021-26) Over the period under consideration, BWCL’s topline rode an upward trajectory. Conversely, its bottomline plunged in 2020 and 2022. BWCL’s margins which had been shrinking until 2020 posted a tremendous rise in 2021. Gross margin continued to grow in 2022, however, operating margin remained static and net margin faded. In 2023, operating margin posted a rise; however, gross and net margin slightly plunged. In 2024, gross margin stayed intact while operating and net margins diminished. In 2025, all the margins posted staggering progress. This was followed by a downtick recorded in gross and operating margins in 2025 while net margin continued to strengthen to attain its optimum level. The detailed performance review of each of the years under consideration is given below. The demand that remained suppressed for the two successive years posted a staggering rebound in 2021 owing to construction package announced by the government as well as rise in infrastructure and real-estate projects in the country. Cement industry’s domestic volume grew by 20 percent in 2021 while exports registered 16 percent surge. BWCL made the most of the improved macroeconomic scenario and attained a stunning 53. 15 percent growth in its topline in 2021. This came on the back of 18 percent rise in the company’s off-take which clocked in at 8. 66 million tons coupled with improved prices. In 2021, BWCL’s capacity utilization stood at 81 percent. Cost of sales only rose by 11. 80 percent in 2021 due to relatively stronger Pak Rupee compared to the previous year and also because the company met 45 percent of its power requirements through its internal Waste Heat Recovery plant, boilers and gensets. Better pricing and cost control measures resulted in gross profit escalating by 1386. 78 percent with GP margin jumping up to 29. 20 percent in 2021 from 3 percent in the previous year. The company was able to curtail its distribution expense by 23 percent in 2021 by managing freight and handling expense and payroll expense despite higher sales volume. Administrative expense also grew marginally by 4. 78 percent in 2021 despite an increase in the number of employees from 1501 in 2020 to 1537 in 2021. Other expense multiplied by around 5572. 73 percent to clock in at Rs. 949. 79 million in 2021 as the company booked hefty provisioning for WWF and WPPF in 2021 which it didn’t do in the previous year. Other income didn’t show any significant movement in 2021 and rose by a mere 3 percent. The company was able to post operating profit of Rs. 14, 690. 56 million in 2021 as against operating loss registered in the previous year. This translated into OP margin of 25. 83 percent in 2021. Better cash generation as well as monetary easing enabled the company to push its finance cost down by 5024 percent in 2021. Better share of profit from UBL offset the finance cost and translated into net profit of Rs. 11, 577. 724 million in 2021 which was up by 23407. 11 percent when compared to the last year’s net profit. NP margin clocked in at 20. 36 percent in 2021 while EPS posted a strong rebound to settle at Rs. 19. 42. This was against the EPS of Rs. 0. 08 and NP margin of 0. 13 percent recorded in 2020. The growth trajectory of BWCL’s topline continued in 2022. The company posted 27. 27 percent growth in its topline which clocked in at Rs. 72, 370. 53 million. However, the growth didn’t come on the heels on improved volumes. Rather, the impetus was provided by upward revision in cement prices in 2022. The local industry shrank during the year whereby the domestic off-take plunged by 1 percent whereas export off-take registered 44 percent fall in 2022 on the back of deteriorating macroeconomic conditions, political mayhem, high inflation and cost of borrowing as well as depreciation of Pak Rupee which dented demand. BWCL’s sales volume dropped by 10 percent year-on-year in 2022 to clock in at 7. 839 million tons. Plant capacity utilization also stood at 73 percent in 2022 due to dampened demand. Cost of sales grew by 22. 64 percent year-on-year in 2022; however, by passing the onus of cost hike on to the consumers, BWCL was able to attain a higher GP margin of 31. 77 percent in 2022. Distribution expense grew by a massive 59 percent year-on-year in 2022 which came on the back of a huge spike in payroll expense of sales force and elevated freight charges during the year. Administrative expense also registered a steep 160. 64 percent jump on account of higher payroll expense as the number of employees grew from 1537 in 2021 to 1921 in 2022, and also because of generous donations. Other expense also considerably grew on account of provisioning done for WWF and WPPF and write off of receivables related to excise duty paid on sales in the previous years. Operating profit grew by 27. 28 percent in 2022; however, OP margin remained stagnant at 25. 84 percent. Higher discount rate, increased working capital requirements as well as capital expenditure drove the finance cost up by 38. 28 percent in 2022. However, once again, the share of profit from UBL was robust enough to offset the finance cost. While profit before tax grew by 24. 52 percent year-on-year in 2022, 130 percent increase in tax expense due to the imposition of super tax resulted in 11. 56 percent plunge in net profit which stood at Rs. 10, 238. 086 million in 2022. NP margin stood at 14. 15 percent while EPS slipped to Rs. 17. 17 in 2022. In the year ended June 2023, BWCL’s topline posted 21. 24 percent year-on-year growth to clock in at Rs. 87, 741. 81 million. While the construction activity remained sluggish during the year on account of dejected macroeconomic indicators, the growth was led by high prices. Overall industry volumes also dwindled in 2023 whereby local and export sales volume dropped by 16 percent and 13. 13 percent respectively as higher construction cost, political chaos and hike in discount rate kept the potential investors at bay. BWCL’s GP margin registered a nominal dip to clock in at 31. 13 percent in 2023 due to passing on cost hike burden to the consumers. Distribution expense also posted a meager 1. 57 percent uptick in 2023 which also speaks volume of the depressed off-take during the year. Low capacity utilization reduced the human resources requirement resulting in a reduced payroll expense. This pushed the administrative expense down by 37 percent in 2023. Other expense also followed the suite and registered 22. 22 percent cut in 2023. However, other income proved to be encouraging and clocked in at Rs. 1382. 99 million in 2023 as against the operating expense of Rs. 445. 32 million in 2022 due to write off of receivables related to excise duty. Operating profit grew by 37. 49 percent year-on-year in 2023. This translated into OP margin 29. 30 percent in 2023. Finance cost continued to be the source of concern for the company and posted 361. 23 percent hike in 2023 on the back of high discount rate and increased borrowings. Share of profit from UBL, despite posting 74. 64 percent growth in 2023, couldn’t offset the huge finance cost which dampened the bottomline growth to 16. 14 percent in 2023. Net profit stood at Rs. 11, 891. 698 million in 2023 with NP margin of 13. 55 percent. EPS grew to Rs. 19. 94 in 2023. In 2024, BWCL posted 18. 44 percent year-on-year growth in its topline which clocked in at Rs. 103, 922. 26 million. During the year, the local sales volume of the overall cement industry dwindled by 5 percent to clock in at 38. 2 million tons. This was due to depressed politico-economic backdrop of the country. The cement sector found its safe haven in the export sales which mounted by 54 percent to clock in at 7. 1 million tons. This was due to Pak Rupee depreciation which made the Pakistani cement attractive to the international buyers. Talking about BWCL, it registered 6 percent higher sales volume during the year which was recorded at 6. 96 million tons in 2024. This was due to the instigation of two new manufacturing lines at Hattar and Mianwali. Improved volumes coupled with increased selling prices enabled the company to record 17. 98 percent higher gross profit in 2024 with GP margin staying intact at 31 percent. Distribution expense surged by 35 percent in 2024 on account of higher freight & handling charges mainly due to improved export volumes. Administrative expense escalated by 52. 80 percent in 2024 due to higher payroll expense. This was despite the fact that BWCL streamlined its workforce from 2128 employees in 2023 to 1979 employees in 2024. Other expense ticked up by 14 percent in 2024 due to increased provisioning done for WWF. Other income deteriorated by 52 percent in 2024 due to considerably thinner income recognized on short-term investment and lower gain recorded on the disposal of property, plant & equipment. BWCL recorded 12. 36 percent uptick in operating profit in 2024 with OP margin ticking down to 27. 80 percent. Although the company discharged a considerable portion of its external borrowings in 2024, high discount rate resulted in 64. 21 percent elevated finance cost in 2024. Share of profit of equity accounted investee grew by 26. 50 percent in 2024 particularly on the back of profit from UBL. Net profit improved by 15. 78 percent to clock in at Rs. 13, 768. 575 million in 2024 with EPS of Rs. 23. 09 and NP margin of 13. 25 percent. In 2025, BWCL’s net sales ticked up by 3. 69 percent to clock in at Rs. 107, 758. 55 million. Competitive international pricing, Pak Rupee depreciation and increased global demand led to 30 percent higher export volumes of the local industry which clocked in at 9. 2 million tons in 2025. Conversely, local sales of the overall cement industry dipped by 3 percent to clock in at 37 million tons due to higher royalties, FED and other taxes on cement industry, elevated construction cost and slow PSDP disbursement. In line with the overall industry sales, BWCL also recorded 2 percent dip in its sales volume which clocked in at 6. 845 million tons in 2025. Cost of sales plummeted by 1. 69 percent in 2025 due to depressed dispatches as well as the company’s increasing inclination towards the use of alternate energy. However, with price optimization, the company was able to drive its gross profit up by 15. 67 percent in 2025 with GP margin climbing up to 34. 59 percent. Distribution and administrative expense mounted by 20. 16 percent and 36. 17 percent respectively in 2025 due to increased payroll expense, freight charges as well as travelling & conveyance charges incurred during the year. BWCL streamlined its workforce from 1979 employees in 2024 to 1866 employees in 2025. Higher profit related provisioning was the cause of 53. 65 percent higher other expense recorded in 2025. However, it was largely offset by 124. 85 percent higher other income posted in 2025 which was the consequence of robust income from short-term investments. Operating profit picked up by 15. 38 percent in 2025 with OP margin clocking in at 30. 93 percent. Monetary easing coupled with lower outstanding liabilities at the end of the year resulted in 32 percent decline in finance cost in 2025. Finance cost was offset by 128. 47 percent progress exhibited by the share of profit of equity accounted investee in 2025 particularly United Bank Limited. BWCL’s net profit clocked in at Rs. 23, 864. 368 million in 2025, up 73. 32 percent year-on-year. This translated into EPS of Rs. 40. 02 and NP margin of 22. 15 percent in 2025. Recent Performance (2026) In 2026, BWCL’s net sales posted a marginal 0. 49 percent to clock in at Rs. 108, 282. 17 million. While cement dispatches of the company increased by 2. 88 percent to clock in at 7. 042 million tons in 2026, lower selling prices due to intense competition in the industry resulted in a marginal uptick in net sales. Overall industry dispatches also increased by 7. 2 percent to clock in at 50. 50 million tons in 2026. Cost of sales surged by 7. 58 percent in 2026 due to higher production activity and escalated cost of power and other raw materials. The company couldn’t pass on the impact of cost hike to its consumers in the face of intense competition. This resulted in 12. 92 percent thinner gross profit in 2026 with GP margin clocking in at 30 percent. Distribution expense nosedived by 23. 82 percent in 2026 due to decline in export sales on the back of geopolitical tensions and closure of Afghan border. Conversely, administrative expense surged by 51. 94 percent in 2026 due to higher payroll expense and greater donations. Workforce was expanded from 1866 employees in 2025 to 2131 employees in 2025. Lesser provisioning done for WWF and WPPF was the cause of 10. 69 percent thinner other expense incurred during 2026. Other income also diminished by 54. 44 percent in 2026 due to massive decline in income from short-term investments due to monetary easing. BWCL posted 18. 41 percent weaker operating profit in 2026 with OP margin falling down to 25. 11 percent. Lower outstanding borrowings and monetary easing for the major part of the year squeezed finance cost by 29. 72 percent in 2026. Share of profit in equity accounted investee (UBL) mounted by 35. 39 percent in 2026, conveniently offsetting the company’s finance cost and operating expense. BWCL registered net profit of Rs. 25, 756. 65 million in 2026, up 7. 93 percent year-on-year. This translated into EPS of Rs. 43. 20 and NP margin of 23. 79 percent in 2026. lower sales, gross profit With the improvement in macroeconomic indicators lately, construction activity is expected to pick up. However, resurgence of inflation and discount rate cycle coupled with higher taxation, energy cost and duties will suppress the margins as many cement companies may not be able to pass on the onus of cost hike to its customers owing to fierce competition in the industry. Disturbance on major sea routes due to geopolitical tensions as well as taller energy cost due to Middle Eastern crisis can also take its toll on the financial performance of the company. However, the company’s increased inclination towards alternate energy will likely counterbalance the escalating cost pressures.

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