DG Khan Cement performance buoys

DG Khan Cement Company Limited declared its 1QFY13 results yesterday, showing a terrific, 3.5 times boost in its profitability on a year-on-year basis. The phenomenal performance revealed at the beginning of FY13 is much in line with the rising trend established over FY12.
The companys top line touted a staggering YoY growth of 15.5 percent, largely on the back of a robust surge in the retention prices by around 11 percent YoY. However, a nominal uptick of four percent YoY was also experienced in the sales volume.
In contrast to the industry export dispatches which plunged by 2.68 percent during the quarter, the exports of DG Khan Cement company thrived by 13 percent YoY owing to significant infrastructural development activities ongoing in the companys major export market, Afghanistan. Moreover, new destinations explored in South Africa also supported the export volumes. On the flip side, the local dispatches remained flat.
A substantial dip in the international coal prices combined with the effective adoption of alternate fuel, garnered healthier margins for the company. The gross margin hovers around 38 percent at the end 1QFY13, up from 31 percent in the same period last year.
The bottom line was further aided by a slump in the operating expenses. The distribution expenses went down by over nine percent YoY, thanks to stable local cement dispatches.
Furthermore, a vigorous payout of four rupees per share - summing up around Rs 355.7 million from investment in MCB bank also propped up the bottom line.
During the period under review, the financial cost dropped off by over 30 percent, while as a percentage of net revenue, it remained five percent in 1QFY13, (down from 8.8 percent in 1QFY12). This owes itself to a significant rate cut of 400 bps since July last year and the effective liquidity management schemes employed by the company.
The effective rate also declined substantially during the period with reference to the deferred taxation which further supported the PAT.
All in all, 1QFY13 remained highly encouraging for DG Khan Cement. Going forward, the Company expects further improvement in cement demand amid much awaited public sector development projects and the infrastructural development activities expected in the election year.

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DG Khan Cement

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(Rs.  mm)                      1QCY13    1QCY12        chg

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Sales                          5,874     5,088       15.4%

Cost of sales                  3,661     3,557        2.9%

Gross (loss) / profit          2,213     1,531       44.5%

Administrative expenses           74         51      43.9%

Distribution and                 575        636      -9.5%

marketing costs

Other operating expenses         103         95       8.0%

Other income                     356        261      36.1%

Profit/(Loss) from operations  1,817       1010      79.8%

Finance cost                      303       449     -32.5%

Profit/(Loss) before taxation  1,514       561      169.7%

Taxation                           75       244     -69.2%

Profit/(Loss) after taxation   1,439       318      352.8%

EPS (Rs)                         3.28      0.73     349.3%

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