PIOC: Lower retentions erode net earnings

MG News | February 27, 2020 at 03:03 PM GMT+05:00

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February 27, 2020 (MLN): Pioneer Cement Limited (PIOC) has announced its financial results for the half-year ended December 31, 2019, as per which the company has posted a loss of Rs 111 million (LPS: Rs 0.49) against net profits of Rs 526 million (EPS: Rs 2.32) of same period last year.

The main reason for the net losses incurred by the company was a hefty decline in gross level margins.

During the period under review, the topline went down by 18% YoY to Rs 4.14 billion on an account of lower retention price amid intense competition in the local market. This substantial decline in topline shrank the gross margin from 23% to 1% coupled with hike in fuel and power expenses.

On the cost side, the distribution cost jumped by 86.65% YoY whereas other expenses plunged by 100% to stand at Rs 204 thousand.

On the other hand, the other income increased substantially by 8 times YoY to peg at Rs 160 million on an account of outperformance of equity mutual fund investment of the company.

Meanwhile, the finance cost surged by 7.6% YoY to Rs 182 million. However, a tax reversal of Rs 83 million came as a breather in the bottom line.

Financial Results for the half-year ended December 31, 2019 ('000 Rupees)
	Dec-19	Dec-18	% change
Gross revenue earned from contracts with customers
Cement- Local	6,858,768	7,052,695	-2.83%
Cement- Export	47,146	234,456	-79.89%
Clinker-Export	-	1,243	-
	6,905,914	7,288,394	-5.25%
Less:
Sales Tax	(1,173,269)	(1,145,063)	2.46%
Federal Excise duty	(1,514,602)	(1,027,681)	47.38%
Commission	(39,558)	(16,964)	133.19%
Discount and rebate	(30,758)	(42,001)	-26.77%
	(2,758,187)	(2,231,709)	23.59%
Sales - net	4,147,727	5,056,685	-17.98%
Cost of sales	(4,102,710)	(3,878,441)	5.78%
Gross profit	45,017	1,178,244	-96.18%
Distribution cost	(161,627)	(86,595)	86.65%
Administrative expenses	(57,251)	(56,706)	0.96%
Other income	160,990	18,338	777.90%
Other expenses	(204)	(147,046)	-99.86%
	(58,092)	(272,009)	-78.64%
Operating profit	(13,075)	906,235
Finance cost	(182,261)	(169,374)	7.61%
(Loss)/Profit before taxation	(195,336)	736,861	-
Taxation	83,668	(209,900)	-
(Loss)/Profit after taxation	(111,668)	526,961	-
Loss/ Earnings per share - basic and diluted (Rs.)	(0.49)	2.32	-

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