Thatta Cement’s Q1 profit surges on strong sales, lower finance costs

October 28, 2025 (MLN): Thatta Cement Company Limited (PSX: THCCL) posted a 27.5% YoY increase in consolidated profit after tax (PAT) for the first quarter ended September 30, 2025, supported by a sharp rise in sales and lower finance costs.

The profit attributable to equity holders rose to Rs645.45 million, compared to Rs536.99m in the same quarter last year, as disclosed in the company’s unaudited consolidated financial statements.

Consequently, earnings per share (EPS) improved to Rs1.52 from Rs1.27 a year earlier.

Net sales surged 55% YoYto Rs2.94 billion in Q1 FY25, up from Rs1.90bn in the same period of FY24, reflecting improved dispatches and pricing dynamics.

However, cost of sales increased at a faster pace, climbing 79% to Rs2.03bn, leading to a contraction in the gross profit margin to 30.9%, down from 40.1% a year earlier.

Consequently, gross profit rose modestly to Rs909.22m versus Rs761.41m in the comparable quarter.

Despite this margin squeeze, Thatta Cement maintained strong bottom-line performance due to disciplined financial management.

The net profit margin, though lower at 21.9% (from 28.3%), remained healthy relative to sector peers.

Finance cost fell sharply by 46.6% to Rs32.84m, from Rs61.51m, aided by the lower interest rate environment.

Administrative expenses almost doubled to Rs76.59m, reflecting higher operational spending tied to diversification activities.

Other income dropped significantly to Rs86.49m from Rs283.5m, contributing to a decline in operating profit to Rs848.63m (vs. Rs923.52m in Q1 FY24).

The company’s effective tax rate stood at 21.7%, notably lower than 41.9% in the prior year, boosting post-tax profitability.

Overall, profit before tax was recorded at Rs815.79m, while net profit after tax stood at Rs638.8m, up from Rs500.96m in the same quarter last year.

The results come on the heels of Thatta Cement’s recent diversification initiatives, marking a significant expansion beyond its core cement operations:

Hospitality Sector Acquisition: In October 2025, the company acquired a 28% stake in Pakistan Services Limited (PSL) — the holding company of the Pearl Continental Hotels — for approximately Rs 6.46 billion.

Agricultural Machinery Venture: Thatta Cement also announced plans to set up Minsk Work Tractor & Assembling (Pvt) Ltd (MWTA), a wholly owned subsidiary, to assemble BELARUS-brand tractors in Balochistan, in partnership with Minsk Tractor Works of Belarus.

Successful Sukuk Issue: Earlier in October, the company completed a Rs 5.5 billion Listed Long-Term Islamic Sukuk, aimed at financing its diversification and expansion initiatives.

The Board of Directors did not recommend any cash dividend, bonus issue, or right shares for the period under review.

Key Financial Summary (Consolidated Q1 FY25)