MLCF: Higher retention prices drive profitability

October 22, 2021 (MLN): Maple Leaf Cement Factory Limited (MLCF) has shown significant progress during 1QFY22 as its net profits stood at Rs839 million (EPS: Rs0.76), registering an increase of 51% YoY on an account of higher-than-expected retention prices and reduced finance costs.

The had recorded a net profit of Rs555mn (EPS: Rs0.51) in the corresponding period a year ago, said in a financial statement sent to Exchange.

During the period, Net Sales of the company jumped by 32% YoY to Rs9.90bn, on account of higher retention prices – owing to elevated local retail prices, and discontinuation of discounts. The company apparently has also sold a good quantity of white cement during the period, a research note by Intermarket Securities (IMS) highlighted.

The massive jump in retention prices compared with last year was attributed to the increase in gross margins that expanded by 2ppt to 22% in the said period.

On the cost front, distribution expenses surged by 2.4x YoY to Rs400mn; most likely due to an increase in fuel prices, branding activities, and sales promotion schemes. While administrative and other expenses climbed by 10% YoY and 3.7 times YoY to Rs217mn and Rs179mn, respectively during 1QFY22.

The improvement in net income was also due to a 27% YoY decline in finance cost amid a lower interest-bearing debt.

MLCF has managed to post strong consolidated earnings despite the increase in cost pressures amid higher international coal prices and freight. Going by the IMS report, it is expected that that North cement prices will increase further, even after the recent increase of PKR15/bag in the past week to pass on the rise in coal and energy prices.

“On the cost front, we expect that coal prices will further go down on top of recent decrease of 25% from its peak of US$240/ton,” said Rahul Hans, Analyst at IMS said.

Therefore, it is believed that elevated local prices and demand, coupled with a decline in energy cost, will increase the profitability of MLCF and the sector at large, he added.

Consolidated Financial Results for the Quarter ended September 30, 2021 ('000 Rupees)

 

Sep-21

Sep-20

% Change

Sales – net

 9,895,557

 7,520,858

31.57%

Cost of Sales

 (7,688,111)

 (6,048,896)

27.10%

Gross profit

 2,207,446

 1,471,962

49.97%

Distribution cost

 (399,531)

 (169,299)

135.99%

Administrative expenses

 (217,481)

 (197,386)

10.18%

Other charges

 (179,116)

 (48,220)

271.46%

Operating cost

 (796,128)

 (414,905)

91.88%

Other income

 11,281

 45,944

-75.45%

Profit from operations

 1,422,599

 1,103,001

28.98%

Finance cost

 (310,773)

 (426,057)

-27.06%

Profit before taxation

 1,111,826

 676,944

64.24%

Taxation

 (272,939)

 (121,762)

124.16%

Profit after taxation

 838,887

 555,182

51.10%

Basic and diluted earnings per share (Rupees)

 0.76

 0.51

49.02%

 

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Posted on: 2021-10-22T15:51:23+05:00

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