Kohat Cement reported a net profit after tax (NPAT) of PKR2.3bn (US$8.17m) on the Pakistan Stock Exchange on 28 April. This figure reflects a 32 per cent decrease QoQ but an increase of 14 per cent YoY. The QoQ decline is primarily attributed to weaker retention prices and lower other income. Cumulatively, Kohat Cement's NPAT stands at PKR9.2bn in 9MFY24-25, up by 42 per cent YoY.
Key highlights of the results, summarised by IMS Research, include net sales for Kohat Cement, which matched market predictions at PKR8.2bn. This represents a 23 per cent decrease QoQ and remains flat YoY, driven by a 15 per cent decline in volumes and an eight per cent fall in retention prices.
Gross margins were reported at 39.5 per cent, a contraction of 2.7 percentage points QoQ, but higher than our estimate of 37.4 per cent. The decrease in gross margins is primarily due to lower retention prices.
Other income fell by 42 per cent QoQ to PKR921m, reflecting reduced returns on cash amidst declining interest rates and the normalisation of gains from equity investments, following a strong performance last quarter (up 42 per cent in 2Q). The effective tax rate increased to 36 per cent, compared to 34 per cent in the same period last year (SPLY).
KOHC’s bottom line is that it is under pressure due to declining interest rates, which are affecting other income streams. Additionally, a potential increase in raw material royalties for producers based in Khyber Pakhtunkhwa could further threaten profitability. However, the company maintains a strong balance sheet with cash holdings of PKR31.5bn, providing the flexibility to fund initiatives such as the announced 30MW coal power plant or pursue expansion when demand improves.
