DGKC: Higher finance cost and lower margins hurt bottom line

MG News | September 17, 2020 at 04:20 PM GMT+05:00

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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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