DGKC: Higher finance cost and lower margins hurt bottom line
MG News | September 17, 2020 at 04:20 PM GMT+05:00
September 17, 2020 (MLN): D. G. Khan. Cement (DGKC) has announced its FY20 financial results, wherein the company reported a net loss of Rs 2.229 billion (LPS: Rs 5.05), against a net profit of Rs 1.864 billion (EPS: Rs 4.16) in FY19.
The loss is attributed to gross margins attrition that clocked in at 5% in FY20 compared to 13% in the corresponding period last year. As per research by Spectrum, this decline in margins was due to weak cement prices and rupee devaluation, resulting in a higher cost of production.
The other major highlight is colossal finance cost which increased by around 42% YoY to Rs 5.11 billion, hurting the financial stability of the company. However, a tax reversal of Rs 1.57 billion provided much-needed respite to the bottom line.
| Consolidated Profit and Loss Account for the year ended June 30, 2020 ('000 Rupees) | |||
|---|---|---|---|
|
| Jun-20 | Jun-19 | % Change |
| Sales | 41,592,685 | 43,627,007 | -4.66% |
| Cost of sales | (39,626,910) | (37,952,807) | 4.41% |
| Gross profit | 1,965,775 | 5,674,200 | -65.36% |
| Administrative expenses | (741,877) | (711,122) | 4.32% |
| Selling and distribution expenses | (1,786,905) | (1,330,984) | 34.25% |
| Net impairment losses on financial assets | (158,730) | (22,343) | 610.42% |
| Changes in fair value of biological assets | 305,256 | 335,739 | -9.08% |
| Other expenses | (710,899) | (530,452) | 34.02% |
| Other income | 2,433,728 | 2,474,759 | -1.66% |
| Finance cost | (5,111,350) | (3,609,744) | 41.60% |
| (Loss)/Profit before taxation | (3,805,002) | 2,280,053 | - |
| Taxation | 1,575,816 | (415,170) | - |
| (Loss)/Profit after taxation | (2,229,186) | 1,864,883 | - |
| (Loss)/Earnings per share - basic and diluted (Rupees) | (5.05) | 4.16 | - |
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