DG Khan Cement Ltd., Pakistan’s second-biggest producer of the building material, returned to a profit in the first-quarter as borrowing costs declined.
Net income was 630.3m rupees (US$7.5m), or 2 rupees a share, in the three months ended Sept. 30, compared with a loss of 223m rupees, or 0.88 rupees, a year earlier, the Lahore-based company said in a statement to the Karachi Stock Exchange today. Sales rose to 4.76bn rupees from 4.4bn rupees.
The decline in financial costs overshadowed the largely flat sales, said Farhan Bashir, analyst at Invest Capital & Securities Ltd., in Karachi, who has a “buy” recommendation for the stock. The company had borrowed to expand its production capacity, he said.
Pakistani cement makers borrowed to expand capacity over the past five years to meet demand in Afghanistan and the Middle East. D.G. Khan increased its production capacity to 4.2Mta from 1.7Mt in 2004.
DG Khan’s finance cost fell 40 per cent to 496.2m rupees, according to the statement.