LAHORE : DG Khan Cement Company (DGKC) announced its 9MFY13 result, booking profits of Rs4.2bn (EPS of Rs9.68) versus Rs2.1bn (EPS of Rs4.73) in 9MFY12 – an increase of 105 per cent YoY. The result is slightly below our expectations (EPS of Rs9.91) mainly due to higher than expected cost of sales. 

The company’s revenues increased by 9 per cent YoY in 9MFY13, on the back of a higher average net retention price while cost of sales stayed relatively restrained (due to lower coal prices), up only 1 per cent YoY. This allowed the company to record a gross margin of 38 per cent as against 33 per cent recorded in the same period last year.   

On a sequential basis, DGKC registered a decline of 10 per cent in earnings in 3QFY13 to Rs1.3bn (EPS: Rs3.03). The decline is due to 1) comparatively lower gross margin of 35 per cent in 3Q vs. 40 per cent recorded in 2Q and 2) and decline in other income (down 25 per cent QoQ).