Kohat Cement Limited: 1QFY23 EPS @ PKR 8.89

Kohat Cement Company Limited (KOHC) announced the financial result for 1QFY23 today whereby earnings arrived at PKR 1,785mn (EPS: PKR 8.89) against PKR 1,398mn (EPS: PKR 6.96) last year and PKR 394mn (EPS: PKR 1.96) in 4QFY22. Primary reason behind the massive 5x jump in QoQ earnings is recognition of super tax to the tune of 10% on full year PBT in the last quarter, which axed earnings, compared to 4% in this quarter.

Result Highlights

· During 1QFY23, sales arrived at PKR 8.85bn (+30% YoY), as a result of over 65% jump in local retention prices whereas the impact became less notable given a 22% YoY decline in offtake to 674k tons amid monsoon rains and flooding across the country. Albeit, on a QoQ basis, revenue underwent a dip of 5% amid 19% decline in dispatches (4QFY22: 831k tons) since hike in cement prices remained inadequate to absorb the impact.

· The gross margins in 1QFY23 settled at 31.3% vis-à-vis 33.2% in SPLY in lieu of volumetric decline, jump in coal prices, higher energy tariff, and PKR depreciation. However, the surge in margins on a QoQ basis from 27.6% in 4QFY22 was owed to better coal inventory management by the company.

· Finance cost arrived at PKR 173mn during the quarter under review, up by 45% YoY / 10% QoQ, attributable to higher interest rates.

· The company booked effective taxation at 32.7% in 1QFY23 vs. 29.9% in SPLY, as the company recognized super tax to the tune of 4% in the quarter under review.

Courtesy – AHL Research

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