Mixed results announced by Pakistani cement companies for 9MFY20

Three Pakistani cement companies have announced their 9MFY19-20 financial results. DG Khan Cement Co Ltd and Kohat Cement Co Ltd have reported losses, but luckily Attock Cement Ltd has reported only a fall in profit during this financial period.

Analysts have attributed losses to a combination of factors, including a significant drop in retention prices in both local and export markets, an increase in finance cost, higher energy tariffs and an increase in transportation cost following the implementation of axle load management legislation. The COVID-19 pandemic was also one of the reasons to negatively impact the profit of the cement companies.

However, analysts expect that direct and indirect incentives by the federal government, particularly a reduction in interest rates and recent hike in cement prices, will impact favourably on cement companies in the coming months.

DG Khan
DG Khan Cement posted a net loss of PKR1.85bn (US$11.53m) in the 9MFY20 against net profit after tax of PKR2.625bn in same period last year. The loss is attributed to an increase in cost of sales, which rose by 16 per cent to PKR29.49bn during this period from PKR25.42bn in the year-ago period. It also reported a higher distribution cost of PKR1.44bn against PKR1bn in 9MFY19, while administrative expenses were higher at PKR518m compared to PKR489m in corresponding period last year. The financing cost has also jumped to PKR3.65bn, up 65 per cent during this accounting period.

Kohat Cement
Kohat Cement reported a gross loss of PKR283m against profit of PKR2.17bn in the 9MFY18-19. The loss in profit is due to a 30 per cent fall in sales to PKR8.57bn during this account period. The financing charge increased from PKR36m to PKR196m as both distribution cost and administrative expenses fell 39 and six per cent, respectively during this comparative period.

Attock Cement
Attock Cement has reported an after-tax profit of PKR1.11bn, down 19 per cent YoY from PKR1.37bn in the 9MFY2019. The decline in profit is attributed to high administrative and distribution cost during this accounting period. The company's sales fell to PKR15.55bn from PKR16.15bn during this nine-month period. It reported a higher distribution cost of PKR1.5bn against PKR1bn in 9MFY19, while administrative expenses rose to PKR392m from PKR379m in the corresponding period last year. Financing also cost declined minutely during this period.