Bestway Cement's financial performance not so best

February 20, 2020 (MLN):  Challenging macroeconomic environment coupled with subdued construction activity has weighed on Bestway Cement Limited (BWCL)’s profitability as its net profits in six-months Jul-Dec 2019 dropped by a noteworthy amount Rs 6.45 billion or 94% YoY to Rs 421 million.

The earnings per share of the company also weakened by the same rate from Rs 11.54 per share reported in Jull-Dec 2018 to Rs 0.7 per share.

The decline in company’s profitability was attributable to several factors such as lower cement demand during the period on account of delay in disbursement of PSDP funds driven by fiscal austerity measures, higher interest rate, currency devaluation and pressure on input cost, particularly fuel and energy prices.

The company’s gross turnover reduced by 17.6% YoY to Rs 33.2 billion from Rs 40.3 billion on the back of lower selling prices due to severe competition. This has led that company’s gross profits to decline significantly by 84% YoY to Rs 19.8 billion from Rs 27.7 billion. In addition, higher fuel and energy prices during the period also squeezed company’s gross profits.

Despite the company witnessed a considerable decline in its major expense heads as its admin cost declined by 30%, distribution expenses dropped by43.5%, other expenses and tax payments fall by 98% and 88% respectively, but the impact failed to lift company’s profitability.

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