Corporate results: Maple Leaf’s profit rises 40% to Rs4.84 billion

Company to set up grey cement production line of 2.1m tons

KARACHI: Maple Leaf Cement on Monday announced a net profit of Rs4.84 billion in the financial year ended June 30, 2016, up 40% compared to Rs3.45 billion in the previous year, according to a company notice sent to the Pakistan Stock Exchange.

Earnings per share jumped to Rs9.18 in FY16 compared to Rs6.55 in the previous year. “This result was above market estimates,” Topline Securities commented.

The results were accompanied with an interim cash dividend of Rs2.5 per share, taking total pay-out for FY16 to Rs4 per share. Despite this, the company’s share price fell 4.5% to close at Rs97.23 whereas the KSE 100-share Index dropped 0.47% or 186 points to 39,278.

The company also announced that it would set up a grey cement production line (brownfield) of 2.1 million tons. This would take its total production capacity to 5.3 million tons.



Analysts say the company’s share price fell because the market feared a price war among cement companies due to their aggressive expansion plans.

In the fourth quarter of FY16, Maple Leaf recorded revenues of Rs6.5 billion, up 15% year-on-year. This was mainly on the back of higher local cement sales, up 16% year-on-year to 0.7 million tons.

Gross margins showed a jump of 947 basis points year-on-year to 46% in the April-June quarter.

“We attribute this to lower cost of production as a result of subdued commodity prices and cheap transportation fares (Maple Leaf is now using railway channels for coal transportation from Karachi Port to its production facility in the north),” the report added.

Financial charges in the fourth quarter dropped 92% year-on-year to Rs16 million.

Pre-tax profit increased 64% year-on-year to Rs2.2 billion in the fourth quarter. However, higher effective tax rate, which was up 20 percentage points to 38%, restricted profit growth to 24%.

In FY16, Maple Leaf’s revenue stood at Rs23.4 billion, up 13% year-on-year, primarily due to strong volumetric growth of 13% to 3.2 million tons.

Published in The Express Tribune, September 6^th, 2016.

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