DGKC - 3QFY23 Result Review,(AKD Off the Analyst's Desk Apr 19, 2023)
D.G. Khan Cement Company Limited (DGKC) announced its 3QFY23 result today, where the company posted unconsolidated PAT of PkR1.2bn (EPS: PkR2.7) vs. PkR0.5bn (EPS: PkR1.2) in the quarter previously, up by 118%QoQ. The result is above our expectations due to improvement in gross margins and lower than expected financial charges.
- Net sales of the company clocked in at PkR18.3bn compared to PkR16.2bn in the previous quarter, an increase of 13%QoQ. The increase in the topline is attributable to the increase in cement offtakes that witnessed growth of 15%QoQ.
- Gross margins have witnessed a significant improvement of 550bps to clock in at 19.0% vs. 13.5% in the previous quarter. We anticipate that lower than expected weighted average coal cost may have played its part in resistance to COGS.
- On the overheads front, distribution cost clocked in at PkR0.54bn, increasing by 2.1xQoQ, possibly due to increase in an transportation cost.
- Furthermore, finance cost of the company rose by 3.9% to PkR1.7bn in the said quarter vs. PkR1.6bn in the previous quarter.
Overall, this takes 9MFY23 earnings to PkR2.1bn (EPS: PkR4.8), a decline of 41.6%YoY compared to NPAT of PkR3.6bn (EPS: PkR8.3) in SPLY. This yearly decline is mainly attributable to the increasing finance cost that almost doubled compared to SPLY, due to a record hike in interest rates. Whereas, the decline in the offtakes in nine months period is absorbed by the retention price increase.
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