DG Khan Cement Company Limited (DGKC) is scheduled to announce its FY22 financial result on 13th Sep’22 whereby we expect the company to post earnings of PKR 4,202mn (EPS: PKR 9.59) against PKR 3,721mn (EPS: PKR 8.49) in SPLY, depicting a jump of 13% YoY. This was primarily owed to a 28% growth in company topline amid strong retention prices which offset the impact of a 10% dip in dispatches to 6,539k tons.
As a result, margins remained largely stable (17.8% vis-à-vis 17.9% in FY21) despite higher coal prices, augmented electricity tariff and PKR depreciation during the year. Meanwhile the last quarter is projected to display earnings of PKR 583mn (EPS: PKR 1.33) compared to PKR 873mn (EPS: PKR 1.99) in 4QFY21, down by 33% YoY. Primary culprit behind weakness in earnings is hit on account of super tax imposition.
Whereas the bottom-line was also axed by lower margins (16.9% vs. 17.6% last year) led by volumetric decline (-30% YoY to 1,305k tons mainly due to a sharp cut in exports), higher coal prices and PKR depreciation. These will offset the impact of a massive jump in retention prices, we view. Moreover, finance costs are forecast to surge by 54% YoY attributable to augmented borrowing and higher interest rates. That said, earnings will also remain pale in comparison to the last quarter (down by 60% QoQ) owed to margin attrition (3QFY22: 18.6) given cut in revenue (25% decline in volumes QoQ to counter higher retention prices) followed by higher coal prices, increased energy tariff and PKR depreciation.
Courtesy- AHL Research