By: Azee Securities Private Limited
DG Khan Cement Limited (DGKC) announced its first quarter result for fiscal year 2016, where the company reported a profit after tax of Rs 1.72 billion (EPS: Rs 3.93/share) with a growth of 49% as against Rs 1.15 billion (EPS: Rs 2.64/share) it announced during the same quarter last year. Increased in local sale and lower coal prices were the main reason behind it. During the quarter, tax losses from Nishat Dairy (PVT) Limited worth Rs 332 million have also been acquired in order to get the benefit of group taxation.
Higher local sale spurs top line growth: Company achieved first quarter net sales of Rs 6.2 billion versus Rs 5.8 billion showing 7% YoY growth. Increment incurred due to better plant operational days and local sales growth. While cost of sales decrease by 3% to Rs 3.86 billion versus Rs 3.98 billion in 1QFY15 due to due to lower coal prices. Gross profit surge by 30% to Rs 2.37 billion versus Rs 1.82 billion due to higher volumetric sales and lower fuel cost. Control on cost of sales resulted in 38% GP margin in 1QFY16 against 31.4% in 1QFY15.
Better Production & dispatches: During the quarter, 849K tons clinker was produced as against 657K tons in 1QFY15, depicting increase of 29%. During same period, 918K tons cement production took place vis-à-vis 840K tons in 1QFY15, showing slight improvement of 9%. The local sales showed 12% growth from 676K tons in 1QFY15 to 759K tons in 1QFY16. However, exports slashed by 17% from 194K tons to 161K tons during the same comparative periods.