Cherat Cement Company Limited (CHCC) announced their 2QFY24 result, where the company posted highest ever quarterly earnings of PkR1.9bn (EPS: PkR9.6) vs. PAT of PkR1.5bn (EPS: PkR7.9) in the quarter before, up 22%QoQ. The said quarterly earnings growth is majorly attributable to the gross margin expansion, possibly due to the lower weighted average cost of coal during the period.

 ·         Net Sales clocked in at PkR10.2bn for 2QFY24 (↑1%QoQ/↓2%YoY). Higher retention prices mainly drive the quarterly increase.

·         Gross margins improved to 34.6% vs. 30.5%/28.7% for 1QFY24/2QFY23, respectively, where we believe the decline in weighted average coal prices to have positively impacted margins.

·         Finance cost of the company reported at PkR386mn vs. PkR425mn in the previous quarter, down 9.1%QoQ. The decline is due to reduced borrowing as total debt decreased to PkR9.9bn in 1QFY24 accounts from PkR15.8bn in SPLY.

·         Other Income increased 194%QoQ to clock in at PkR142mn vs. PkR48mn in the previous quarter, owing to increased ST investments.

·         Overall, this takes 1HFY24 PAT to PkR3.4bn (PkR17.5/sh) against PkR3.04bn in SPLY, up by 12%YoY. The increase is mainly attributed to a 12%YoY increase in gross profits amid higher retention prices.

·         Alongside the results, the company announced an interim cash dividend of PkR1.5/sh.

Courtesy – AKD Research