DG Khan Cement’s earnings increase

Other income results in better than expected performance.

KARACHI: DG Khan Cement – one of the largest cement companies in Pakistan – has posted a profit after tax of Rs1.61 billion in the second quarter ended December 2013, up 14% compared to a profit of Rs1.41 billion in the same period last year.

Earnings per share (EPS) of the company jumped to Rs3.68 against Rs3.22 in the corresponding period of the previous year.

According to AKD Securities, the result was above their expected earnings of Rs1.27 billion with an EPS of Rs2.91 owing to the higher ‘other income’ of the company.

The other income of DG Khan, which is part of the Nishat Group, rose 64% quarter on quarter (QoQ) to Rs598 million during second quarter of fiscal year 2013-14 (2QFY14) because of increased dividends received from its investment in Muslim Commercial Bank (MCB).

Moreover, additional dividend received from the textile sector like Nishat Mills Limited (NML) and Nishat Chunian Limited (NCL) also contributed to the significant increase in the company’s other income, Global Research reported on Wednesday.

Revenues in 2QFY14 registered an increase of 10% year-on-year (YoY) which reached to Rs6.54 billion, while gross margins declined to 34% from 40% during 2QFY13 due to higher power costs. The financial charges of company also declined sharply, coming off by 45%YoY.

Resultantly, the first half (July-December 2013 period) earnings were recorded at Rs2.66 billion or an EPS of Rs6.08 compared to Rs2.82 billion or an EPS of Rs6.45, down by 8% YoY.

Government of Pakistan increased power and gas prices in August-September 2013 period so higher tariffs resulted in a decline in gross margins of 5 percentage points to 34% even as revenues grew by 5% YoY during 1HFY14 to Rs12.40 billion, AKD report added.

DG Khan reported a net income of Rs5.5 billion for the fiscal year 2013, up 34% compared Rs4.11 billion in fiscal year 2012.

Published in The Express Tribune, February 13^th, 2014.

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