KOHC: Cost efficiency fuels profitability

October 21, 2021 (MLN): Kohat Cement Company Limited (KOHC) has shown outstanding performance during 1QFY22 as its net profits after tax clocked in at Rs1.40 billion, which is 2.7x higher than profits of Rs507million reported in the same period last year.

The EPS of the company clocked in at Rs6.96 per share, jumped from Rs2.52 per share posted in 1QFY21.

The exceptional increase in the company’s profits is largely attributable to higher retention prices, discontinuation of discounts, increase in dispatches, and cost efficiencies.

The Net sales of the company jumped by 31.49% YoY to Rs6.8bn from Rs5.17bn last year. An increase in local cement prices and discontinuation of discounts helped elevate retention prices, thus overall revenue, a report by Intermarket Securities said.

Despite heightened international coal prices, the company’s gross margin remained elevated at 33% compared to 19% in the corresponding period of last year. This significant improvement is owing to reduced in power and fuel cost (used a mix of local, Afghan, and piled up low cost imported coal inventory, as per noted by Darson Securities.

On the cost front, selling and distribution costs accelerated up by 32% YoY in tandem with sales, while its other expenses rose by 2.5x during the period.

Moreover, the Finance costs of the company dropped to Rs118.85mn, down by 14% YoY due to a reduction in debt amid low-interest rate regime.

The effective tax rate of the company came at 30% compared to 27% in the same period the previous year.

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