Cherat Cement's profitability soars by 55% during 9MFY22

April 25, 2022 (MLN): The net profits of Cherat Cement Limited (CHCC) for the period of nine months ended on March 31, 2021, have soared by 54.5% YoY to stand at Rs3.4 billion (EPS: Rs17.68), compared to Rs2.22bn profit recorded in 9MFY21.

This jump in the bottom line is due to improved dynamics in the construction sector, higher retention prices in the local market and lower financial costs.

During the period under review, the company had posted a revenue of Rs22.6bn against Rs18.4bn in SPLY, up by22.6% YoY, primarily on the back of higher
net retention prices and dispatches. The cost of sales of the company increased to Rs16.3bn due to rising coal and freight charges. As a result, the gross margin had improved slightly to 28% as compared to 26% in SPLY.

On the expense side, the distribution cost of the company arrived at Rs385.5mn, increasing by 22% YoY. This is primarily attributable to increased freight charges associated with higher export sales. Likewise, the admin expense of the company during the period jumped by 15.5% YoY.

Moreover, 4.7x YoY increase in other income and a 25% YoY decrease in finance cost further reinforced the bottom line. The decline in finance costs is mainly ascribed to improved cash flows during the review period that resulted in a decrease in working capital requirements.

The effective tax rate during the period was 27% compared to 26% in SPLY.

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