DG Khan Cement Company Limited (DGKC) announced the financial result for 3QFY22 today, posting a profit after tax (PAT) of PKR 1,442mn (EPS: PKR 3.29) compared to PKR 2,048mn (EPS: PKR 4.67) in SPLY, depicting a decline of 30% YoY. This took the 9MFY22 earnings to PKR 3,619mn (EPS: PKR 8.26) against PKR 2,848mn (EPS: PKR 6.50) last year.

Result Highlights           

·        Topline during 3QFY22 clocked-in PKR 15,862mn, displaying a jump of 46% YoY given a surge in retention prices coupled with a 4% uptick in offtake to 1,685k tons. On a QoQ basis, revenue dipped by 3%, as augmented prices were offset by a 16% decline in dispatches. During 9MFY22, sales showed a jump of 32% YoY amid massive hikes in retention prices which counterbalanced the impact of a 5% downturn in offtake to 5,150k tons. 

·        Gross margins arrived at 18.6% in 3QFY22 in contrast to 22.8% last year, owed to higher coal costs, PKR depreciation, and augmented energy tariff which eroded the impact of higher retention prices. On a sequential basis, margins remained impressive, depicting a growth from 16.9% in 2QFY22 led by better coal management with Afghan coal forming a big chunk of the mix as well as higher inventory levels, we view. This took the margins in 9MFY22 to 18.0% (unchanged from 9MFY21) which shows price hikes and inventory management remained sufficient to offset the impact of augmented cost pressures emanating from adverse movement in coal, PKR-USD parity and energy tariff.

·        60% YoY decline in other income during 3QFY22 was owed to a one-off dividend of PKR 15/share by MCB recognised in same period last year.

·        The company booked effective taxation at 26% in 3QFY22 vs. 23% in SPLY.

Courtesy – AHCML Research