During FY23 net revenue for the company clocked in at PKR 64.98 Bn, an increase of 12% against PKR 58 Bn in FY22. However, gross profit fell to PKR 9.56 Bn in FY23 compared to PKR 10.4 Bn in FY22 registering a decrease of 8.4%. Profit from operations stood at PKR 9.9 Bn in FY23, up 3.3% compared to PKR 9.6 Bn in FY22.
Finance costs for FY23 were reported at PKR 6.74 Bn against PKR 3.57 Bn in FY22, an increase of 88.8%. This was primarily due to the higher benchmark rate set by SBP.
Profit before tax fell 47.5% in FY23 to PKR 3.16 Bn from PKR 6 Bn. The company suffered a loss after tax of PKR 3.6 Bn in FY23 compared to a profit after tax of PKR 2.97 Bn. Breakup Value per share fell 8% from PKR 159.59 in FY22 to PKR 146.52 in FY23.
The company has two subsidiaries, Nishat Paper Products Company Limited (NPPCL) and Nishat Dairy Private Limited (NDPL).
In FY23, NPPCL had a revenue of PKR 3.1 Bn and incurred a loss of PKR 177 Mn. NPCCL currently possesses 3 main production lines with 220 million paper bags capacity and aims to add 90 million polypropylene bags capacity to meet the growing demand. It would ideally dispose of 2 paper production lines as it sees the market using PP bags more in the future.
In FY23, NDPL made a revenue of PKR 4.9 Bn and profit of PKR 491 Mn.
Going forward the company expects demand for cement to remain flat in FY24 before moving on to recover 10-15% in FY25.
The imposition of axle load restrictions have impacted margins and therefore the company has increased prices in an attempt to pass on the increase in costs. Retail prices are now at PKR 1,260 per bag in the North and PKR 1,100 per bag in the South.
The company is hopeful of increasing its exports to the US and Mexico in order to have stable sales volumes. Clinker exports prices are at USD 30-31 per ton.
The company’s energy mix utilizes 70% of its own generation and 30% through the national grid. It pays about PKR 41 plus sales tax per unit of electricity purchased from the grid.
The company expects finance costs to continue to bite into profits in the near future due to high levels of inflation and a high policy rate set by SBP. It also expects new capacities coming online to increase competition.
DGKC is also wary of the new IMF agreement that will be required in CY24 and conditions attached to it which could impact sales in the construction sector.
Important Disclosures
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