LAHORE - DG Khan Cement Company Limited (DGKC) has announced its 1HFY12 financial results. The company has reported a superb 6.67 times higher earnings to Rs1.28b translating into an EPS of Rs2.92 as against the PAT of Rs192m (EPS of Rs0.44) in the corresponding period last year. The gigantic growth in earnings of the company was primarily on the back of magnificent growth of 31pc YoY in top line to Rs10.70b as against Rs8.18b in the same period last year because of strongly elevated retention prices which were seen 25pc YoY higher in the country to Rs425/bag as against the per bag prices of Rs339 during the same period last year.
The company owing to a dashing growth in top line and improved cost of sales mainly because of lower production would register a massive 106pc YoY growth in its gross profit to Rs3.48b (gross margin of 32pc) in comparison of Rs1.69b (gross margins of 21pc) in 1HFY11.
DGKC has reported an enormous augment of 92pc YoY in EBIT to Rs2.53b as against EBIT of Rs1.32b in the 1HFY11 despite of a huge jump of 57pc YoY to Rs1.36bnin operating costs in comparison of Rs868m in the corresponding period last year mainly because of sharp rise in distribution cost which is anticipated to record a rise of 61pc YoY to Rs1.24b. Nevertheless, the other income which has increased by a sharp 19pc YoY to Rs650m has contributed about 51pc share in total after tax profit as the EPS on core income would have been only Rs1.44. Higher other income was primarily on the back of heavy dividend income which company has received from its associates. Moreover, financial charges have also declined by a sharp 13pc YoY to Rs886m in 1HFY12 as against the Rs102b is also expected to add the weight in earnings.
It is expected DGKC to have even better earnings in 2HFY12 primarily because of expected solid dividends from its associates. As far as the core income is concerned, we believe, higher prices, decline in coal prices, lower interest rates and expected reconstruction activities within country would be the key factors to ensure a better overall performance in FY12.