DGKC posts Rs2.22bln FY20 loss

KARACHI: DG Khan Cement Company Limited (DGKCC) on Thursday announced a loss of Rs2.229 billion (LPS: Rs5.05) for the year ended June 30, 2020, mostly owing to a drastic drop in dispatches.

The cement-make had earned Rs1.864 billion (EPS: Rs4.16) in the corresponding period a year earlier.

Analysts at the brokerage Arif Habib Limited, in a report said, “The company topline during 4QFY20 dropped 26 percent YoY to Rs7.5 billion owing to weak retention prices together with 15 percent YoY decline in total dispatches”.

“During FY20, revenue witnessed a dip of 6 percent YoY to Rs38 billion as erosion in retention prices offset the 14 percent YoY growth in volumes of (7,202k tons vs. 6,304k tons).”

The brokerage analysts said the gross margins in 4QFY20 jumped by 289bps YoY/622bps QoQ to 6.8 percent, led by augmented closing inventory levels and decline in coal prices (average of USD 61/ton during the quarter).

“In FY20, margins tumbled to 4.2 percent in contrast to 13.2 percent given weakness in retention prices, volumetric decline and costs associated with the new line,” brokerage said in its report.

Further, the report said the company’s finance costs dipped 5 percent YoY to Rs994 million in the quarter under review given cut in interest rates.

DGKC booked a tax credit of Rs90 million in 4QFY20 vis-à-vis an effective taxation of 147 percent in same period last year (adjustment of deferred tax liability).