By: WE Financial Services Limited
Kohat Cement Company Limited (KOHC) recently announced corporate results for the period ended December 31, 2015 where the profit after taxation (PAT) of the company witnessed a decline of 7.3% YoY to Rs 1,366 million (EPS: Rs 8.84) in 1HFY15 versus a PAT of Rs1,474 million (EPS: Rs 9.54) in 1HFY14. The negative growth in bottom-line was primarily on back of surge in cost due to higher electricity price. In addition to higher cost, the decline in volumetric sales too had a negative impact on the bottom-line however rise in other income and lower finance cost did provided support.
Double-digit fall in 2QFY15: The decline in bottom-line was more significant in 2QFY15 alone where the PAT of the company totaled Rs 683 million (EPS: Rs 4.42) which is 20.4% YoY less when compared to an earning of Rs 858 million (EPS: Rs 5.55) in 2QFY14. This decline was largely owing to lower volumetric sales and surge in fuel cost however lower finance cost and hike in other income did had a positive impact on the profitability.
Marginal growth in net revenue: Though the volumetric sales remained low, the net revenue of the company managed to grow by a marginal 0.9% YoY in 1HFY15 to Rs 5,906 million versus Rs 5,853 million in 1HFY14 on back of higher cement prices. On the other side due to hike in electricity prices, the cost of sales climbed by 11.7% YoY in 1HFY15 to Rs 3,874 million versus Rs 3,469 million in 1HFY14. Therefore the gross profit reduced to Rs 2,032 million in 1HFY15 which is 14.8% YoY down from a gross profit of Rs 2,384 million in the identical period in FY14. The gross profit margin dropped to 34.4% in 1HFY15 versus 40.7% in 1HFY14. The cost of the company to reduce moving forward as the electricity tariff has been declined while installation of 15MW WHR plant would also save cost.
Volumes: Export drop 21% YoY, Local rises 3% YoY: The overall volumetric sales of the company totaled 868k tons in 1HFY15 reducing by 2% YoY from 886k tons of cement sold in the similar period in FY14. Owing to availability of cheaper Iranian cement in Afghanistan, the export sales volume declined to 134k tons in 1HFY15 which is 21.4% YoY down from 170k tons in 1HFY14. The local sales however remained higher owing to increasing construction activities in the country. The local sales volume totaled 735k tons in 1HFY15 which is 3% YoY up from 716k tons in 1HFY14.