LAHORE: The DG Khan Cement (DGKC) has earned Rs 2.3 billion during the third quarter of ongoing fiscal year against Rs 2.2 billion in the same quarter last year.
The result is in line with market estimates. DGKC recorded consolidated revenue of Rs 8.1b, up by 26 percent in 3QFY16.This considerable jump in revenue was mainly on the back of 22 percent increase in revenues from cement operations.
Cement operations posted stellar performance in 3QFY16, mainly due to robust cement demand, up by 25 percent. This growth was driven by strong local sales, up by 19 percent and excellent export volumes, up by 70 percent. It is suggested that exports increased mainly on the back of higher dispatches to India.
Moreover, exports to African countries also improved. During the period under review, DGKC’s consolidated gross margin inched up 396bps YoY. However, cement operations posted healthy gross margin, up 801bps YoY owing to lower input costs and efficient plant utilisation.
“We believe poorly performing subsidiary of DGKC, Nishat Dairy, increased the company’s overall cost of production. This squeezed the consolidated gross margin of the company,” said an expert.
Pretax profit from cement operations went up considerably by 40 percent YoY in 3QFY16. However, net earnings improved by 16 percent YoY mainly due to higher effective tax rate, up by 14 ppt YoY.
In 9MFY16, DGKC’s consolidated revenue and net earnings increased by 12 percent and 10 percent YoY respectively (revenues and net earnings from cement operations up 13 percent and 19 percent YoY, respectively in 9MFY16).
