Corporate results: Attock Cement’s profits slide

Higher taxes eat away at earnings.

KARACHI:

Attock Cement on Wednesday posted a profit-after-tax of Rs871 million in the first half of fiscal year 2013-14 (FY14), down 9% from Rs958 million in the corresponding period of the previous year.

Earnings per share (EPS) in the first six months have declined to Rs7.61, compared with Rs8.37 in the previous year. The company posted an interim cash dividend of Rs3 per share or 30% for the first six months of FY14.

The earnings of the company also declined to Rs449 million or Rs3.92 per share in the second quarter of FY14, against Rs601 million or Rs5.24 per in the same quarter of FY13.



“The decline in profitability of the company is due to a higher tax rate,” JS Global Capital analyst Atif Zafar said, adding that inflationary pressures, especially the impact of the increase in electricity rates in August 2013 have negatively affected the earnings of the company.

However, Zafar said, the company would see the positive effect of the recent increase in cement price in the third quarter (Jan-Mar 2014) of FY14.

Unlike many of the country’s cement companies, Attock Cement is an absolutely debt free company. Its plant lies in Hub, Balochistan on a narrow desolate highway that connects the town to Karachi.

The poor law and order situation almost completely nullifies what are otherwise excellent advantages of the plant’s location: cheap land, abundant electricity supply, quick access to the ports, and the ability to recruit from Karachi’s skilled workforce.

Over the last few years, its trucks transporting company’s products and buses carrying its employees have been targeted, resulting in deaths of a few of its employees.

Published in The Express Tribune, January 23^rd, 2014.

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