Cement companies have been enjoying a combination of strong demand, subdued raw material prices and even better sales expectations for future months. So, even before Lafarge Pakistan Cement (LPCL) reported a top line that is almost six percent beefier than the same period of last year, market participants were expecting it.
But, the nice surprise for those invested in the Company came from the cost of goods sold, which actually registered a marginal reduction despite higher sales. As a consequence, LPCL posted a hefty rise of more than 19 percent in gross profits in 1H CY13, compared to 1H CY12.
Prior to the announcement, a research report by Elixir Securities pointed out that the Company has been aggressively paying off outstanding debt, CY11 onwards. It was this drive that helped bring down finance costs sharply to less than half of the tally reported at this time, last year.
The fall in finance costs was also beyond the expectations posted by this and other brokerage houses. Resultantly, the earnings per share of Re0.66 posted in 1H CY13 not only trumped the Rs038 EPS reported in 1H CY12; it also brought a pleasant surprise for investors.
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Lafarge Pakistan Cement
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Rs (mn) 1HCY13 1HCY12 chg
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Sales 5,068 4,784 6%
Cost of sales 3,294 3,297 0%
Gross profit 1,774 1,488 19%
Gross profit margin 35% 31%
Administrative expenses 430 279 54%
Finance cost 257 605 -58%
NPAT 865 499 73%
EPS (Rs) 0.66 0.38
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Source: KSE notice
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