DG Cement Unexpectedly Posts a Profit of Rs 2.7 Billion in Q3 2017

DG Khan Cement has announced a consolidated profit of Rs. 2.73 billion for Q3, ending in September 2017. This marked a massive 58% increase, compared with Rs. 1.72 billion in the same period last year, according to a company notice sent to the Pakistan Stock Exchange (PSX).

Earnings per share increased to Rs. 6.24 in Jul-Sept 2017 compared to Rs. 3.94 in the corresponding quarter of previous year.

The result was above market expectations, said Topline Securities in a report.

DG reported a better earnings this quarter thanks to the huge tax credit available for the company as a result of an investment in the new cement line (located in Hub, Balochistan), Topline reported.

The company did not book any corporate tax owing to tax adjustment under depreciation allowance on its new hub line according to different sources. The plant is expected to be commence operations during FY18.

Revenues increased by 14% YoY in Q1 FY 2018, thanks to a 15% estimated increase in cement dispatches.

The consolidated sales were up by 14% YoY in Q1 FY18, due to the 18% volumetric growth witnessed in high margin local cement sales. Gross margins came under pressure, down 8 ppts to 33% in Q1 FY18, owing to rising fuel and coal prices.

DG Khan Cement’s share price was up by 3.45% to Rs. 150.90 at the PSX on Wednesday’s closing.

Recently, Dera Ghazi Khan Cement Limited (DGKC) had posted a net profit of Rs. 7.85 billion for the year ending June 30, 6.3% down compared to Rs. 8.38 billion in the same period last year.