DG Khan Cement’s after tax profit increases

RECORDER REPORT

KARACHI: The after tax profit of DG Khan Cement has increased to Rs. 4,108.118 million in the year ended June 30, 2012 (FY12) as compared to Rs. 170.961 million earned in FY11.

The company’s earning per share increased to Rs. 9.38 in the period under review against Re 0.46 in the same period last year.

The board of directors of the company in its meeting held on Monday at Lahore recommended final cash dividend at 15 percent i.e. Rs. 1.50 per share.

According to the financial results sent to Karachi Stock Exchange, the company’s sales increased to Rs. 22.949 billion in FY12 against Rs. 18.577 billion in FY11 while the cost of sales increased to Rs. 15.443 billion against Rs. 14.192 billion.

The company’s finance cost decreased to Rs. 1.670 billion against Rs. 2.079 billion.

The company’s profit before taxation increased to Rs. 4,052.466 million in FY12 against Rs. 601.192 million in the fiscal year FY11. “The result was above our expectation of Rs. 7.2/share, which was mainly due to a tax reversal of Rs. 760 million in the last quarter”, Syed Abid Ali, an analyst at Arif Habib Limited said. He said that the healthy pricing scenario helped the company to widen its gross margin to 33 percent in FY12 from a modest of 24 percent a year back.

He said that the company’s selling expenses have dropped by an 11 percent to Rs. 2.2 billion in FY12 as compared to Rs. 2.5 billion in FY11. This was mainly on account of an 11 percent decline in exports volume to 1.2 million tons compared to 1.4 million tons in FY11. The company reported a tax reversal of Rs. 760 million in the fourth quarter of FY12, which has mitigated the tax charged to the tune of Rs. 704 million during the nine month of FY12 at an effective tax rate of 25 percent. This tax reversal has resulted more than expected bottom line for the company.