DG Cement announced consolidated profit of Rs 783 million in Q2FY18, which is down by 72.47% as compared to a profit of Rs 2.66 Billion in the same period last year – mainly due to a one-time tax reversal.
Major dent in consolidated earnings in Q2FY18 came from the tax reversal which led to 48ppts increase in effective tax rate to 70%.
The earning per share of the company fell down to Rs 1.67 as compared to Rs 6.08 in the corresponding year.
The company booked a huge tax credit (availing 65B of the Income Tax Ordinance, 2001) in Q1FY18 on account of investment in new cement line (Hub, Baluchistan) as the plant is expected to commence operations in Q4FY18. The company will now avail the tax benefits in H2FY18.
Revenues were up by 3% YoY in Q2FY18 mainly due to 2% increase in revenues from cement operations. This is despite a ~10% growth in local dispatches; local net retention prices declined by 5% or Rs 16/bag.
Gross margins dropped to 32% compared to 42% in Q2FY17 due to augmenting coal prices.
The income tax expense clocked in at Rs 1.66 billion (65% effective tax rate), which hints that DGKC has not only booked normal tax expense in Q2 but has also reversed the tax credit booked in Q1.
DG Cement was at Rs 140.25 when the exchange closed, with an increase of Rs 0.18.
In additional notes, mentioned in the company releases, the Board of Directors at Nishat and DGK Cement have decided to invest an additional amount worth Rs. 1 billion in Hyundai Nishat Motor Company via subscription of ordinary shares.
Furthermore, the management at D.G. Khan Cement announced that it is currently seeking regulatory permissions to set up brownfield cement production line and also reviewed the progress on existing expansion operations on production line 3 at D. G. Khan Khofli Sattai site.
D.G. Khan Cement Company Limited, (DGKCC) is amongst the largest cement manufacturers of Pakistan with a production capacity of 14,000 tons per day (4.200 million tons/annum).They produce and sell clinker, ordinary Portland, and sulphate resistant cement in Pakistan. The company operates through Cement, Paper, and Dairy/Farm Supplies segments