Varied results for PSX listed cement producers in 1QFY19-20
The financial results of eight cement companies of Pakistan for the July-September 2019-20 period reveals that their profits shrank owing to weak sales, high financial charges and other unavoidable factors, with a few of them also sustaining losses.
Industry overview
In the 1QFY19-20 Pakistan's cement industry posted a marginal growth of 2.6 per cent, amounting to 11.13Mt compared with 10.85Mt last year. Local dispatches remained more or less the same, rising to 9.12Mt from 9.06Mt in the same period last year. However, exports registered a healthy increase of 12.5 per cent to 2.02Mt from 1.79Mt in the same period last year.
Kohat Cement
Kohat Cement Co Ltd (KOHC) announced its financial results for the 1Q ended September 2019, earning a net profit of PKR88.164m (US$567,285) as compared to PKR528.54m in the same quarter last year. The fall is attributed to poor sales, which fell by 15 per cent to PKR 2.9bn from PKR3.5bn in the same quarter last year. However, the company incurred lower selling and distribution and administrative/general expenses of PKR23.61m and PKR59.71m, respectively against PKR26.9m and PKR67.294m, respectively in the same quarter last year.
Fecto Cement
Fecto Cement Ltd (FECTC) reported a net loss of PKR54m in 1QFY20 as compared to profit of PKR36m in the same quarter last year. The major factor responsible for negative margin was a decline in sales to PKR897m from PKR1.1bn during this accounting period. However, the company saw administrative expenses fall to PKR61m, compared to PKR68m in the same quarter last year. Distribution costs increased to PKR33m against PKR28m in the same period last year.
Power Cement
Power Cement Ltd posted a net profit of PKR7.9m as compared to PKR10.9m earned in the year-ago quarter. The fall in profit is attributed to a decline in sale by 34.7 per cent to PKR583m from PKR892m in the same quarter last year. The finance cost rose by 195 per cent to PKR124m from PKR42m during this reporting period.
Pioneer Cement
Pioneer Cement Ltd (PIOC) reported a net loss of PKR185m as compared to profit of PKR257m earned in the same quarter last year. The result is reportedly due to an increase in finance cost by 52.5 per cent. Company sales also decreased by 3.8 per cent to PKR3.1bn from PKR3.2bn in the same quarter last year.
There was also a higher distribution cost and administrative expenses of PKR44m and PKR29.93m, respectively against PKR41m and PKR28m in the same quarter last year.
Flying Cement
Flying Cement Co Ltd (FLYNG) earned a net profit of PKR 21.9m as compared to PKR30m in the same quarter last, year which is dropped by 27 per cent.The major factor responsible for the fall in profit was the decreased in sales by 50 per cent to PKR 421m from PKR850m in the same quarter last year. The company also incurred higher administrative expenses of PKR12.7m against PKR10.7m, but selling and distribution costs dropped to PKR1.3m from PKR2.7m in the same quarter last year.
Gharibwal Cement
Gharibwal Cement Ltd (GWLC) saw a net loss of PKR235m as compared to profit of PKR269m earned in the same quarter last year. The fall is attributed to an increase in finance cost and current tax expenses. The company incurred a higher selling and distribution expenses of PKR157m against PKR53m but lower general and administrative expenses of PKR94m from PKR98m in the same quarter last year. The company sales decreased by 13 per cent to PKR2.2bn from PKR2.52m, during this period.
Cherat Cement
Cherat Cement Co Ltd (CHCC) posted a net loss of PKR338m as compared to profit of PKR431m earned in the same quarter last year, despite increase in sale to PKR4.48bn from PKR3.34bn during this period. The increase in finance cost by 500 per cent to PKR593m from PKR97m during this accounting period was the main contributing factor. The company's distribution cost remains flat at PKR91.61m, but administrative expenses rose to PKR72m from PKR64m in the same quarter last year.
Thatta Cement
Thatta Cement Co Ltd (THCCL) incurred a net loss of PKR11.5m as compared to profit of PKR49.7m earned in the same quarter last year. The fall is attributed to decline in sales by 43.3 per cent, which fell to PKR398m from PKR702m during this period. The company incurred a smaller selling and distribution cost and administrative expenses of PKR10m and PKR23.9m, respectively against PKR16m and PKR6m in the same quarter last year.
