Bank Profits Rescue Bestway Cement As Its Kilns Lose Steam

KARACHI: Strip out its stake in United Bank Limited and Bestway Cement's 2025-26 looks a lot less rosy. The country's biggest cement producer still booked Rs25.76 billion in after-tax profit, 7.9% more than the year before. Its kilns, though, made less money.

Operating profit, the money Bestway makes from cement itself, dropped to Rs26.52bn from Rs31.84bn. That is a 16.7% slide, disclosed at the company's corporate briefing for the year to June 30, 2026. UBL filled the hole. Bestway's share of associates' profit, driven by UBL, climbed to Rs14.55bn from Rs10.75bn. Put simply, 40 rupees of every 100 Bestway earned before tax came from associates, led by the bank.

EPS came in at Rs43.20, against Rs40.02 last year. The board went bigger on payouts too: 400% of face value, which works out to Rs40 a share, up from 340%. The Rs40-per-share annual payout equals roughly 93% of FY26 earnings per share.

Margins crack under cost pressure

Sales barely moved. Bestway pushed out 7.04 million tonnes, 2.9% more than a year ago, and still finished with net revenue of Rs108.28bn, up a mere 0.5%. Each tonne fetched less. Net retention slid to Rs15,377 from Rs15,743.

Also Read: Bestway Cement Profit Climbs Despite Weakening Core Business and Shrinking Margins

Costs went the other way. Raw material and packaging got pricier, and cost of sales swelled 7.6% to Rs75.82bn. Gross margin thinned to 30% from 34.6%, its weakest reading since 2020-21. Salaries and donations pushed selling, admin and distribution spending up nearly a fifth, to Rs4.37bn.

The market outran Bestway

Demand came roaring back. Local dispatches across the industry hit 41.5 million tonnes, 9.5% higher, and the north, Bestway's only home market, grew even faster at 10.9%.

Bestway managed 4.1%.

Its local sales reached 6.99 million tonnes, not enough to hold ground. Bestway's national share slipped to 16.8% from 17.7%. Up north the drop looks sharper: 20.1%, down from 21.4%.

Exports all but vanished. The regional conflict and the shut Afghan border hit northern shippers hard, and Bestway sent just 53,000 tonnes abroad, 59.3% less than last year. The whole northern industry lost 54% of its export volume.

Dispatch-based capacity utilisation crept up to 46% from 44.7%. On that measure, more than half of Bestway's 15.3Mt annual capacity remained unutilised.

Cheaper money softened the blow

Falling policy rates helped. So did loan repayments. Net finance cost came down 23.7% to Rs4.68bn, and a smaller deferred tax charge trimmed the tax bill 15.6% to Rs10.63bn. Add the UBL windfall and a shrinking operating profit still turned into a bigger bottom line.

Bestway handed Rs31.7bn back to lenders and shareholders during the year: Rs15.3bn in loan repayments and Rs16.4bn in dividends. Operating cash flow fell to Rs24.16bn as tax payments, super tax included, jumped 40%.

The result: a Rs7.64bn net cash outflow, which the company covered with short-term facilities. Year-end cash and cash equivalents stood at minus Rs18.68bn.

Unpaid dividends more than tripled, to Rs10.51bn from Rs3.09bn. Trade and other payables rose to Rs34.35bn, driven by coal and royalty dues.

Bestway lent Rs4.29bn to its subsidiary Bestway Automotive, a line that did not exist a year ago. The briefing disclosed the loan but provided no further detail on Bestway Automotive's plans.

Long-term debt moved the right way. Financing, current portion included, fell Rs8.1bn to Rs30.7bn, while shareholders' equity grew 4.4% to Rs133.9bn.

What comes next

Industry local dispatches for 2026-27 so far run 8% ahead of last year, the company said. Management calls itself cautiously optimistic.

Fuel and freight costs worry it most, along with supply chains that the drawn-out regional conflict keeps disrupting. It expects lower interest rates and government housing and infrastructure projects to lift demand.

Bestway also rolled out white cement for local and export buyers this year and took its captive solar capacity to 115.4MW. It remains Pakistan's largest cement maker. Its latest numbers, though, show how heavily its earnings now lean on a bank.