LAHORE - DG Khan Cement Company Ltd (DGKC) has just announced its FY11 annual operating results. The company has posted Profit after Tax (PAT) of Rs170. 96 million translating into an EPS of Rs0. 39, posting a substantial decline in growth of 27 percent against the corresponding period of last year when the company had recorded PAT of Rs233. 02m and EPS of Rs0. 53 respectively.
The main reason behind the decline in earnings is attributed to higher effective tax rate of 72 percent (last year effective tax rate was 35 percent) and also the company has book one time loss of Rs119m on account of impairment on investment.
The Top line of the DGKC witnessed a sharp upsurge of 14 percent to Rs18. 18 billion during FY11 as against the sales of Rs16. 28 billion in the corresponding period last year. The main reason behind the increase in monetary sales was sharp rise of 32 percent YoY in the retention prices. It is also worth mentioning that, during FY11 in terms of volumetric sales remained not so lucky for the sector, as both, local and export dispatched remained lower by 7 percent and 12 percent respectively. The main reason behind the sluggish local and export dispatches in FY11 was monsoon rains in the beginning of the year which was converted into a devastating flood later on and badly impacted cement demand. Moreover, local market remained a victim of over supply situation as lesser exports forced players to target local market. On export front, decline was mainly because of expanded regional capacities, cut down in construction activities post economic meltdown and heavy sea freight charges on exports. Gross profit of the company posted an upsurge of 62 percent YoY to Rs4. 38b versus Rs2. 70 billion in same period last year.
Other income of the company has always been playing role of bottom line defender. The company has posted jump in other income of 21 percent YoY to PKR1. 10 billion as against PKR912m same period last year. The other income has played a pivotal role in protecting company from going into loss as the core operation could have posted a loss of PKR936m (LPS of PKR2. 14) based on the same tax which company has applied on its earning.
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