PACRA maintains Entity Ratings of Flying Cement Limited

Flying Cement Company Limited ("the Company" or "Flying Cement"), a part of the Flying Group, operates a single manufacturing unit with an annual production capacity of 1.2 million tons. Strategically located in North Punjab, the facility primarily caters to the northern region of Pakistan. In FY24, the cement industry saw a 1.6% rise in total dispatches to 45.3 MT, driven by a 55% surge in exports amid favorable international prices and rupee devaluation. However, domestic dispatches declined by 4.6% due to sluggish construction activity. 1HFY25, continued downward trend, with total dispatches fell by ~4% to 22.93 MT. Local sales dropped by 10.5%, while exports grew by ~31% to sustain capacity utilization. Amid industry-wide challenges, Flying Cement achieved notable growth, dispatching ~145,920 tons in 1HFY25, up 74.5% from ~84,137 tons in 1HFY24. Improved pricing also contributed, with average price per ton increasing 33% to PKR 19,355 (1HFY24: PKR 16,941). As a result, revenue rose ~65% YoY to PKR 3,927 million in 1HFY25 (1HFY24: PKR 2,368 million).
Despite growth in the top line, profitability, remained under pressure, with margins lagging behind the industry average. During 1HFY25, The gross profit margin declined to 12.8% from 16.4%, while the net margin fell to 2.1%, down from 7.2% in the SPLY. The margin contraction was mainly due to higher electricity costs, inflation-driven increases in administrative and distribution expenses, costs associated with the commissioning of Line-II and tax-related provisions. Consequently, the Company posted a net profit of PKR 81mln in 1HFY25, compared to PKR 171mln in 1HFY24—despite a substantial 44% reduction in finance costs. However, the management remains optimistic about its future prospects, with a key growth driver being the expected commissioning of Line-II in June 2025. Once operational, this will enhance the Company’s total clinker capacity to 11,700 TPD. The project has now entered its trial production phase—marking a major step toward completion. The Company manages its working capital requirements through a combination of internally generated cash flows and short-term borrowings. The current ratio declined to 0.3x in 1HFY25, compared to 0.4x in 1HFY24, reflecting tighter liquidity. Operating cashflows also weakened, with FCFOs decreasing to PKR 265 million in 1HFY25 from PKR 386 million in the same period last year. To improve liquidity, long-term lenders deferred principal repayments until September 2025, providing financial flexibility and eased immediate cash flow pressures. As of 1HFY25, the Company’s equity base reached PKR 12.3 billion and total leveraging stood at 32%. The Company remains under rating watch due to ongoing pressure on its financial risk profile and delays in its expansion project.
The ratings remain contingent upon the timely servicing of the Company’s long-term debt, the successful commissioning of Line-II with the anticipated favorable outcomes, and the continued steadfast financial backing from the sponsoring family. Sustained—or preferably improved—cash flow generation and a strengthened capital structure are critical. Any significant deviation from projected financial indicators could exert downward pressure on the ratings.

About the Entity
Flying Cement Company Ltd, listed on PSX, started commercial production in 2005 and is engaged in the manufacturing and sale of Ordinary Portland Cement. Currently, the Company is one of the small players in industry, having 2.3% share in North region’s cement capacity (operational). The majority shareholding vests with the sponsors and their family members. The overall BOD constitutes eight board members including CEO. Three directors are Flying Cement’s executives while five are non-executive directors, including two independent and one female director.