Kohat Cement Company Limited (KOHC) announced the financial result for 3QFY23 today, posting a profit after tax (PAT) of PKR 1,624mn (EPS: PKR 8.08) compared to PKR 1,646mn (EPS: PKR 8.18) in SPLY, depicting a decline of 1% YoY / 17% QoQ. This took the earnings in 9MFY23 to PKR 5,363mn (EPS: PKR 26.70) vis-à-vis PKR 4,630mn (EPS: PKR 23.05) in SPLY.

Result Highlights

· Topline during 3QFY23 clocked-in PKR 10.0bn, up by 17% YoY led by a nearly 40% hike in retention prices which offset the impact of a 17% decline in dispatches to 769k tons. In 9MFY23, revenue jumped up by 26% YoY due to aforementioned reason (offtake of 2,313k tons vs. 2,727k tons in SPLY).

· Gross margin during 3QFY23 arrived at 22.4% vs. 29.2% last year on the back of volumetric decline, augmented coal prices, higher electricity tariff and PKR depreciation which countered the impact of topline growth. On a QoQ basis, margins depicted a compression from 27.0% in lieu of a 9% dip in revenue (volumes went down by 10% QoQ whereas prices rose very mildly given higher FED and GST), coupled with higher coal prices. Meanwhile, margins in 9MFY23 settled at 26.7% against 30.7% in the same period of the prior year attributable to volumetric decline (15% YoY), augmented coal prices, higher electricity tariff and PKR depreciation, which eroded the impact of higher retention prices.

· Finance cost grew by 17% YoY in 3QFY23 due to higher interest rates but came down by 1% QoQ amid lower borrowing.

· Other income escalated by 3x YoY to PKR 541mn in 3QFY23 given augmented cash and cash equivalents as well as higher interest rates.

· The company booked effective taxation at 29.7% in 3QFY23 vs. 28.3% in 3QFY22.

Courtesy – AHL Research