Karachi: DG Khan Cement Company Limited (DGKC) has announced a significant turnaround in its financial performance for the fiscal year 2024, reporting a profit of PKR 542 million (Earnings Per Share: 1.24) in contrast to a loss of PKR 3.6 billion (Loss Per Share: PKR 8.3) in the previous fiscal year. This positive shift is attributed to lower taxation in FY24.
According to AKD Securities Limited, the company’s sales increased by 2% year-on-year, reaching PKR 66 billion in FY24 from PKR 65 billion in FY23, driven by improved retention prices. DGKC’s utilization level was 72% in FY24, surpassing the industry’s average of 55%, although slightly lower than the 75% recorded in FY23. The company’s clinker capacity from its facilities in DG Khan, Khairpur, and Hub totals 22,400 tons per day.
The company currently utilizes a blend of Afghan and Darra coal at its northern facility, while its southern plant relies heavily on imported coal. With reduced excise duties on Afghan coal, management anticipates a PKR 2,000-3,000 per ton decrease in prices, potentially leading to a similar reduction for Darra coal. Presently, Darra coal costs PKR 36,000 per ton, whereas Afghan coal ranges between PKR 38,000 and 40,000 per ton.
DGKC’s power generation capacity is 184.76MW, against a requirement of 113MW, primarily sourced from a mix including Furnace Oil, Gas, Waste Heat Recovery, Coal, and Solar energy. The company’s reliance on the national grid is minimal, contributing only 10-15% of total power consumption. The cost of coal-based power generation is approximately PKR 22-25/unit, whereas generation from furnace oil stands at around PKR 33-34/unit. The company plans to install 5MW of wind and solar power at the HUB site by the end of FY25.
Management noted that the economic slowdown adversely affected the construction sector in FY24, with industry utilization levels declining to 55% from 60% in FY23. This decline is primarily due to lower domestic sales, which constituted 46% of total utilization in FY24, down from 54% in FY23. Conversely, export sales utilization increased to 9% from 6% the previous year. In response, DGKC is focusing on expanding clinker and cement exports to improve plant utilization and offset fixed costs, with America identified as the most lucrative market for cement exports. Bangladesh remains the primary market for clinker exports.
The company confirmed that all three of its plants are operational, although higher inventory levels at the Kallar Kahar plant might lead to potential downtime. Price disparities persist between the North and South regions, with the North’s Maximum Retail Price at PKR 1,450 per bag, compared to PKR 1,250 per bag in the South. Current retention prices exceed PKR 16,000 per ton in the North and remain over PKR 14,000 per ton in the South.
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