DG Khan Cement posts Rs 4.2/share loss for 9MFY20 

During 9MFY20, DG Khan Cement Limited (DGKC) has posted loss of Rs4.2/share compared to earnings of Rs6.0/share in 9MFY19.

The Company has reported a loss of Rs2.3/share for 3QFY20 compared to earnings of Rs2.0/share in 3QFY19, which can be attributed to erosion in gross margins.

A point worth noting is that Net sales declined by 9%YoY during 3QFY20 despite increase in volumetric sales by 6%YoY as cement prices in the Northern region declined by over 15%YoY during the quarter.

As a result, Gross profits declined by 97%YoY to Rs56 million for 3QFY20 due to a sharp decline in retention prices and higher coal costs.

Financial cost increased by 32%YoY due to the increase in borrowing by of the Company. During 9MFY20, the same has surged by 62% YoY.

Selling and distribution expenses increased by 22%YoY due to higher exports related transportation costs, exports were up 23%YoY.

Analysts flag 1) higher-than-expected impact of Covid-19 and 2) weak pricing environment as key risks for the Company.

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