Kohat Cement Company Limited (KOHC) announced its 1QFY22 financial result today, posting a above street consensus profit after tax (PAT) of PKR 1,398mn (EPS: PKR 6.96), compared to PKR 507mn (EPS: PKR 2.52) during SPLY and PKR 966mn (EPS: PKR 4.81) in 4QFY21.

· KOHC displayed a topline jump of 31% YoY during the quarter under review to PKR 6.8bn led by higher retention prices which offset the impact of a slight decline in dispatches (876k tons in 1QFY22 vs. 906k last year).

· Gross margins displayed a remarkable growth and arrived at 33.2% in 1QFY22 (SPLY: 18.5%) attributable to recovery in retention prices (inventory gains) and use of cheaper local coal, which countered the impact of volumetric decline, PKR depreciation and augmented other costs (imported coal, packaging and freight). On a QoQ basis, margins surged by 7ppts (4QFY21: 26.1%) owed to the aforementioned reasons.

· Finance costs dipped by 14% YoY to PKR 119mn in 1QFY22 amid lower borrowing.

· The company booked effective taxation at 29.9% in 1QFY22 vs. 27.2% last year.

Courtesy – AHL Research