DGKC earns 45% higher profits amid strong revenue growth

April 25, 2022 (MLN): DG Khan Cement Company (DGKC), has posted consolidated net profits of Rs3.25billion (EPS: Rs6.98) in 9MFY22, 45% higher than the profits of Rs2.2bn (EPS: Rs4.9) achieved during the same period in the previous fiscal year, amid strong revenue growth.

DGKC is a public limited company incorporated in 1978 as a limited liability company. The Company is primarily engaged in the production and sale of Clinker and Cement with its plants stretched from North to Center to South. The company also enjoys a notable presence in foreign markets including Bangladesh, Afghanistan, China, Sri Lanka, and other parts of central Africa.

The company’s top line registered a growth of 3x YoY, primarily due to a surge in retention prices and higher volumes. However, there was pressure on costs related to rising coal prices that affected gross margins. The gross margins clocked in at 18%, down by 5ppt during the said period on the back of a mammoth increase in coal costs, PKR depreciation and augmented energy tariff.

With regards to the company’s major expense heads, DGKC’s admin expenses swelled by 2.9x YoY. Selling and distribution costs also went up sharply by around 3.4x YoY during the period under review on the back of an increase in clinker exports.

The company’s finance cost inflated by 3.2x YoY as the central bank increased interest rates in the second quarter of the ongoing fiscal year on the back of growing inflation.

The Other income rose by 24% YoY owing to dividend income from MCB, NML and NCL.

On the tax front, the effective tax rate stood at 21% in 9MFY22 as opposed to 23% in SPLY.

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