DGKC: Lower retention prices and finance cost erode net earnings

By MG News | October 25, 2019 at 01:23 PM GMT+05:00

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October 25, 2019 (MLN): DG Khan Cement Company Limited (DGKC) has announced its financial earnings today for the quarter ended on September 30th 2019, as per which, the company has borne a net losses after tax of Rs.1.44 billion (LPS: Rs 3.30), as compared to net profits of Rs. 341 million (EPS: Rs 0.78) in the corresponding quarter of last year.

The massive decline in company’s overall earnings was primarily driven by the result of contraction in gross margins (-5 pps YoY) on the back of lower retention prices on domestic cement sales, higher distribution costs ((2x YoY) along with upsurge in finance cost (2x YoY).

Top-line earnings increased by 11.12% YoY, to Rs 9.7 billion due to upsurge in dispatches of the company.

The company’s selling and distribution cost soared by 2.7x YoY on the back of higher freight charges on exports.

In addition, the escalation in finance cost to Rs 1.3 billion was due to higher borrowing rates as against the comparative period.

Consolidated Profit and Loss Account for the quarter ended September 30, 2019 ('000 Rupees)
	Sep-19	Sep-18	% Change
Sales	9,765,763	8,788,734	11.12%
Cost of sales	(10,255,008)	(7,709,856)	33.01%
Gross profit	(489,245)	1,078,878
Administrative expenses	(169,881)	(187,198)	-9.25%
Selling and distribution expenses	(486,307)	(183,919)
Other operating expenses	(39,159)	(83,621)	-53.17%
Changes in fair value of biological assets	93,318	27,196
Other income	582,983	475,048	22.72%
Finance cost	(1,378,108)	(650,853)
(Loss)/Profit before taxation	(1,886,399)	475,531
Taxation	439,617	(133,975)
Profit after taxation	(1,446,782)	341,556
(Loss)/Earnings per share - basic and diluted (Rupees)	(3.30)	0.78

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