Investor Presentaiton

Cement • • • Business Risk-Outlook • With a widened fiscal deficit, the PSDP spending has narrowed in the recent years and is expected to continue at the same average. On the other side, the sector's production capacity is continually jacking up in anticipation of ambitious initiatives such as NPHP, construction package and CPEC. Private investment in construction activities is crucial in this scenario for the sector's revenue. With dispatches picking up at a healthy pace, capacity utilization levels are expected to improve in FY21 supporting cement bag price. Also, with the strengthening of crude and coal prices in International markets, the manufacturers are expected to raise their prices likewise in order to keep their margins intact. Coal prices are expected to remain rangebound in FY22 and FY23. The sector's profitability is highly sensitive to change in prices. As per estimates, with other factors constant, a decrease of over PKR~60/bag in average retention prices has the potential to erode the operating profitability of the sector. Sensitivity Analysis Figures in PKR mln (*except price/bag) Change in Interest Rate PACRA 1% 2% 3% Impact on Profitability Percentage of Sector's Operating Profitability 2,014 4,027 6,041 4% 7% 11% Change in Price/bag -PKR (Local) 30 60 90 Impact on Profitability 28,331 56,662 84,992 Proportion of Sector's 51% 101% 152% Operating Profitability Note: Profitability of the sector in 1HFY21 is extrapolated for calculations. Currently, interest rates are at historically low rates, as SBP slashed down interest rates from 14% to 7% as a proactive measure for support in Covid-19 environment. The cement sector has benefited substantially from the low interest rates, which may increase in the coming periods as the economy heads towards stabilization. Source: APCMA, PBS, Companies Financial, PACRA Internal Database 13

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