Karachi Lucky Cement, Pakistan's biggest producer of the building material, will post a record profit this year as demand for new homes offsets sluggish government spending.

"We lack housing, we lack infrastructure, the population is growing and there is a lot of potential on the domestic side," Abid Mohammad Ganatra, director of finance, said in an interview at his Karachi office on Thursday.

"It will be a record profit this year. No doubt about that."

Prime Minister Yousuf Raza Gilani's government has cut spending on roads and bridges to curb a budget gap that may rise to as much as 7 per cent of gross domestic product in the year ending June, according to the International Monetary Fund. Even so, domestic demand for cement increased 8 per cent in the six months ended December 31, Ganatra said, adding usage could rise to 30 million tonnes in the next two years from 24 million.

Net income at Lucky Cement rose to Rs1.51 billion (Dh60 million) in the three months ended December 31 from Rs733.9 million a year earlier, the company reported last month. Lucky had a record annual profit of Rs4.59 billion in the 12 months ended June 30, 2009. The company's shares were unchanged yesterday after falling 0.3 per cent to Rs98.75 on the Karachi Stock Exchange Thursday. The stock has surged 32 per cent this year, compared with the 14 per cent rally in the benchmark KSE100 Index.

"The company has many advantages compared with others and has utilised them quite well," said Habib-ur-Rahman, who manages stocks and bonds worth Rs8.2 billion at Atlas Asset Management in Karachi. "They took a timely decision on expansion and that is paying off now."

Lucky Cement increased its production capacity to 7.75 million tonnes in 2009, from 1.2 million tonnes at the start in 1996. More Pakistanis are building houses as overseas residents send more money home and the fastest inflation in Asia after Vietnam increases farmers' income, said Ganatra, 46, who has been with the company since 1994.

Pakistan's population of 196 million people is growing at an annual rate of 2.1 per cent, according to the government.

Pakistan's so-called inward remittances rose 34 per cent in January to $1.1 billion (Dh4 billion), pushing payments for the first seven months of the fiscal year 21 per cent higher from a year ago, according to central bank data.

Diversify risk

Lucky will begin construction of a cement factory in Congo by June through a joint venture with local company Groupe Rawji as the African nation seeks to rebuild infrastructure destroyed in more than a decade of war.

The plant, which will have a capacity to produce 1.2 million tonnes a year, will be completed by the end of 2014, Ganatra said.