LAHORE - The DG Khan Cement Company Limited (DGKC) has reported a superb growth in earnings as its after tax earnings which have gone up massively by 4.53 times to Rs1.44b translating into an EPS of Rs3.28 as against the PAT of Rs318m and EPS of R073 in the 1QFY12.The main factors that drove the profit miles up were 1) higher sales 2) improved cost of sales 3) higher other income and 4) payment of tax on lower effective tax rate.In experts view, monetary sales witnessed a massive rise of 15 per cent YoY to Rs5.87b in 1QFY13 as against the sales of Rs5.09b in 1QFY12 due to higher volumetric sales and retention prices. The company on the back of rise in top line and improved cost of sales due to lower coal prices posted reported a massive 45 per cent YoY growth in its gross profit to Rs2.21b (gross margin of 38 per cent) in comparison of gross profit of Rs1.53b (gross margins of 30 per cent) in 1QFY12.Experts have observed that the company has reported an enormous growth of 80 per cent YoY in EBIT to Rs1.82b as against the EBIT of Rs1.01b in the 1QFY12. In addition to this, increase in other income by 36 per cent YoY to Rs356m have strongly contributed about 25 per cent in total after tax profit as the EPS on core income stands at Rs2.47. The higher other income was recorded owing to hefty dividend income which the company has received from its associate companies.

 Moreover, decline in financial charges by a sharp 33 per cent YoY to Rs303m in 1QFY13 as against the Rs449m in 1QFY12, the lower financial charges also helped the company to have added weight in earnings. Moreover, the company has incorporated an effective tax rate of 5 per cent which has strongly lifted up the after tax profit of the company.In experts view, ongoing work on Bhasha Dam, higher retention prices, lower interest rate and reconstruction activities in flood affected areas remained the key reason behind the exciting earnings of the cement producers. However, going forward, they also see slow down in the pace of growth in sales and profits of the cement producers as the prices are gone exceptionally higher which can put an adverse impact on the local demand. However, coal remains the strong factor which can ensure stability in the earnings in case of further pressure on its prices in international market.