DG Khan Cement’s profit soars to Rs1.3b

DG Khan Cement reported a 160.8% spike in its profit to Rs1.3 billion for the quarter ended December 31, 2020 owing to a rise in retention prices coupled with a decline in repair and maintenance cost.

According to a notice sent by the company to the Pakistan Stock Exchange on Friday, the cement manufacturer had reported a profit of Rs500.7 million for the same quarter of 2019.

Accordingly, the earnings per share amounted to Rs2.98 in the October-December 2020 quarter against Rs1.14 in the corresponding quarter of previous fiscal year.

Sales of the firm depicted a decline of 4.16% as they dropped from Rs12.9 billion in October-December 2019 to Rs12.3 billion in the same period of 2020.

Arif Habib Limited analyst Misha Zahid said DG Khan’s topline in the second quarter of fiscal year 2020-21 fell 4% because of a 7% reduction in cement offtake to 2.08 million tons, which offset the impact of higher retention prices.

Gross margins during the quarter expanded by 800 basis points to 21% given higher retention prices coupled with lower coal prices, which quashed the impact of rupee depreciation, she said.

Administrative expenses of DG Khan Cement plunged 21.3% to Rs178.3 million during the quarter. Expenses under the head had stood at Rs226.8 million in the same period of 2019.

In addition, finance cost of the firm dropped nearly 40% to Rs805.7 million during the quarter under review compared to Rs1.3 billion in the corresponding three months of 2019.

“Finance cost went down during the quarter given the cut in interest rate,” said Zahid.

She said that the company booked effective taxation at 16% vis-à-vis tax credit of Rs424 million recognised in the same period of last year.

During the day, DG Khan Cement’s share price rose Rs1.24 to close at Rs135.82 with 6.7 million shares changing hands at the Pakistan Stock Exchange.

Fauji Cement

Fauji Cement Company’s profit soared 378% to Rs905.2 million in October-December 2020, aided by higher cement offtake and increase in retention prices.

Accordingly, the earnings per share of the company rose from Rs0.14 during the October-December quarter of 2019 to Rs0.66 in the final quarter of 2020. Sales of the company recorded a 15% jump to Rs6.1 billion in the OctoberDecember 2020 quarter.

The company had managed to make sales worth Rs5.3 billion during October-December 2019. “Topline of the firm increased, led by higher retention prices, which offset the impact of 2% dip in dispatches to 914,000 tons,” said Arif Habib Limited analysts Tahir Abbas and Misha Zahid in a joint report.

During the quarter under review, gross margins of the company increased to 25% as compared to 7% in the same period of last year, which was aided by a recovery in retention prices as well as soft coal prices.

Finance cost fell from Rs52.2 million in October-December 2019 to Rs33 million in the same period of 2020.

The company booked effective taxation at 27% versus tax credit of Rs36 million in the second quarter of 2020, said Arif Habib Limited analysts. During the day, Fauji Cement’s share price declined Rs0.79 to close at Rs25.37 with 8.1 million shares changing hands at the Pakistan Stock Exchange.