Maple Leaf Cement incurs 32pc loss in first half

Maple Leaf Cement Factory Limited (MLCFL) announced it had landed a loss of 32 percent to Rs1.767 billion for the half year ended December 31, 2019 (EPS: Rs2.42), mostly because of tumbling gross margins.

The company had posted a profit of Rs1.334 billion with EPS of Rs1.94 in the corresponding period earlier.

Brokerage Arif Habib Limited in a report said the cementmaker’s topline jumped 35 percent year-on-year to Rs9 billion in 2QFY20 as lower prices in the quarter under review offset the impact of a massive 82 percent surge in dispatches to 1.57 million tons.

“In 1HFY20, its revenue went up 31 percent year-on-year to Rs16.2 billion supported by a robust 77 percent jump in total off-take to 2.9 million tons. Albeit, weak retention prices kept the growth contained,” brokerage house added.

Given a decline in prices, tagged with rupee devaluation and costs associated with the company’s new 2.2 million ton line, 2QFY20 margins retracted by 15ppts to 5.5 percent (2QFY19: 20.7 percent).

On a quarter-on-quarter basis, margins recuperated from 3.9 percent in 1QFY20 led by robust topline growth alongside lower coal prices, while In 1HFY20, margins tumbled to 3.8 percent (1HFY19: 24.6 percent) given aforementioned reasons.

The company’s finance costs shot up three times to Rs870 million in 2QFY20 given augmented borrowing by the company as well as higher interest rates.