DG Khan Cement Reports 22% Increase in Earnings, Despite Topline Decline

Karachi: D.G. Khan Cement Company Ltd. (DGKC) disclosed its financial outcomes for the first quarter of FY25, revealing a 22% year-over-year increase in earnings, surpassing market expectations. This improvement was notably driven by robust gross margins despite a downturn in overall sales volume.

According to AKD Securities Limited, the company recorded earnings of PKR 804 million with an earnings per share (EPS) of PKR 1.8, marking a significant rise from the PKR 661 million and EPS of PKR 1.5 reported in the same period last year. This earnings boost comes in the face of a 7% year-on-year decline in topline to PKR 15.3 billion, attributed to a 12% drop in company offtakes, which stood at 1.18 million tons during the quarter.

Gross margins remained stable at 19.6%, marginally adjusting from 19.5% in the same period last year, with the increased royalty rates effectively passed on to consumers. However, operating expenses saw a substantial rise by 29% year-over-year, fueled by a 61% surge in transportation charges due to significantly higher exports, counterbalanced somewhat by a 10% decrease in fuel prices.

Other financial highlights include a 26% increase in other income, largely due to a 29% rise in dividend income from its banking associate, MCB. Additionally, finance costs decreased by 24% to PKR 1.6 billion, thanks to a 15% reduction in total outstanding debt. The report also noted a previous quarter’s loss which was impacted by higher taxation, resulting from a deferred tax charge following changes in the export taxation regime announced in the last Federal Budget.

AKD Securities maintains a ‘Buy’ stance on DGKC, setting a June 2025 target price of PKR 109 per share, which suggests a potential capital upside of 38%.

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