In the previous fiscal while most domestic cement manufacturers were enjoying higher sales, growth for Kohat Cement's (PSX: KOHC) top line had been stunted due to obstruction of its mining operations "by local mischiefs during December 2014".
However, its latest result announcement provides reaffirmation to investors that have remained optimistic on the domestic cement sector even in the face of choppy PSX and tumbling international equities. During the first half of the ongoing fiscal, the company's dispatches grew by a hefty 6.38 percent on the back of stellar growth of 16.32 percent in domestic sales which managed to absorb the fall in exports (25.67 percent).
Thanks to weak input prices, and lower energy costs the company's cost of goods sold grew negligibly in the period. Consequently, its gross margin surged sizably when compared to 1HFY15. The management also reports that its Waste Heat Recovery power plant with production capacity of 15 megawatts is "at commissioning stage and shall be fully operational in the third quarter". The power plant should help it further rein in cost of production in future.
Growth in other income, significant drop in the company's effective tax rate and cuts in finance costs; all contributed to a beefier bottom line. Investors were also rewarded with Rs5 dividend per share, along with the impressive result announcement. Little wonder then, that the company's stock ended Thursday's trade session at its upper circuit breaker.
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