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Karachi, D.G. Khan Cement Company Ltd. (DGKC) shifted its financial trajectory this quarter, reporting earnings after facing a significant loss in the previous one. Key factors influencing this turnaround include improved gross margins attributed to falling coal prices and reduced operating costs.
According to AKD Securities Limited, DGKC revealed its 1QFY24 results today. The company has declared earnings of PkR661mn, a stark contrast to the loss of PkR5,748mn recorded in the preceding quarter. The former loss was largely the result of tight gross margins, increased financial expenses, and the repercussions of the retrospective super tax’s enforcement.
Despite this positive shift in earnings, DGKC’s topline saw a decline of 2.5%QoQ, registering at PkR16.5bn as opposed to PkR16.9bn in the previous quarter. This decrease is attributed primarily to a 12%QoQ drop in sales volumes, which neutralized the effects of heightened retention prices.
A notable highlight from the quarterly results is the company’s significant leap in gross margins, reaching 19.5%, compared to 10.7% in 4QFY23 and 15.3% in the same period last year. A primary driver behind this improvement is the reduction in coal prices. It’s important to mention that coal-fired power plants (CFP) make up about 35% of DGKC’s power mix.
On the operational front, expenses saw a 21%QoQ dip, chiefly because of decreased distribution expenses, an outcome anticipated in light of reduced freight and handling charges stemming from lower exports than the prior quarter.
However, the company experienced a 25%QoQ downturn in other income, which settled at PkR827mn, a figure that did not meet expectations. Additionally, the financial cost edged higher to PkR2.1bn, from PkR1.9bn in the preceding quarter, suggesting a potential rise in short-term loans during this period.
The post D.G. Khan Cement Reports Earnings in 1QFY24 Following Last Quarter’s Loss appeared first on Pakistan Business News.