D.G. Khan Cement Company Limited (DGKC) announced its result for 1QFY21 wherein the company reported a loss after tax of PKR 0.351Bn (LPS: PKR 0.80) compared to a loss of PKR 1.43Bn (LPS: PKR 3.26) in the previous quarter.

The decline in earnings can mainly be attributed to lower other income owing to the absence of dividend income from the subsidiaries. Gross margins of the company witnessed an increase of 3ppts on a sequential basis and 16% on a YoY basis to stand at 10%, mainly due to the combined impact of low energy costs and better cement retention prices.

Net sales of the company rose by 41% QoQ to PKR 10.5Bn on account of a 32% increase in total cement dispatches. On a YoY basis, net sales grew by 16% due to higher retention prices (cement prices were PKR 507/bag compared to PKR 530/bag in 1QFY21).

Selling and admin expense increased by 59/20% QoQ/YoY to PKR 763Mn on the back of higher cement dispatches.

Finance costs declined significantly by 22/39% QoQ/YoY to PKR 771Mn amid lower interest rates during the period.

Going forward, we expect improvement in DGKC’s earnings given the improved retention cement prices and lower energy costs. (BMA Capital).