Kohat Cement’s Earnings Rise Despite Decreased Revenue

Kohat: Kohat Cement Company Ltd. (KOHC) announced its financial results for the third quarter of fiscal year 2025, revealing a notable increase in earnings despite a decrease in revenue. The company reported earnings of PkR2.3 billion, an improvement from the PkR2.1 billion reported in the same period last year. This 14% year-over-year increase in earnings per share was driven by enhanced gross margins.

Revenue for the company saw a decline of 4% year-over-year, falling to PkR8.1 billion from PkR8.5 billion. This was primarily due to a 5% decrease in sales volumes, which overshadowed a 1% rise in retention prices.

Kohat Cement’s gross margins improved significantly to 39.5% from last year’s 29.9%. This improvement was attributed to higher retention prices, a decline in coal prices, and lower reliance on grid power, which now accounts for about 40% of the company’s energy needs.

Other income for the period saw a 15% decline year-over-year, dropping to PkR921 million due to lower yields on investments. The company also benefited from a substantial reduction in finance costs, which decreased by 60% to PkR61 million, owing to reduced outstanding debt and easing interest rates.

The effective tax rate for Kohat Cement increased slightly to 36%, compared to 34% in the same period last year and 37% in the second quarter of fiscal year 2025.

Cumulatively, the company’s profitability for the first nine months of fiscal year 2025 reached PkR9.2 billion, marking a 42% increase from PkR6.5 billion in the same period last year.

AKD Securities Limited maintains a ‘BUY’ recommendation for Kohat Cement, citing earnings growth supported by declining coal prices and improved cost efficiencies, alongside increased reliance on solar power. The target price for December 2025 is set at PkR537 per share, suggesting a potential upside of 40%.