As the year closed for the Kohat Company Cement Limited (KSE: KOHC), there was more than just volume sales to have gained from. Net earnings increased by an impressive 20 percent, largely driven by an overwhelming rise in other income.
Higher retention due to increase in cement prices during the year had an impact culminating in the increase in sales. While volumes have increased locally, the companys exports may have had a hitting from neighbouring Afghanistan. Under such a scenario, other investments seem to have paid off. Gains from the companys investments in mutual funds and equities have been substantial. By the third quarter of the year, income from sale of scrap had also risen considerably.
Moreover, finance costs declined by almost 38 percent during the year, giving strength to the bottom line.
Going forward, the company will see a rise in financing costs as it invests in a Waste Heat Recovery plant to curtail energy dependency on the national grid. The plant, which is to be imported from China, will be able to meet 30 percent of KOHCs energy requirements and is projected to come online by the second quarter of FY16. The project will cost KOHC Rs2 billion with 80 percent of the amount to be raised through debt.
Infrastructure damages in the North region from the recent rains may increase cement sales over the coming months as the government undertakes reconstruction activities. All the same, robust local demand will also be crucial for KOHC as it undertakes a major investment this year.
=====================================================
KOHC - KEY FINANCIALS
=====================================================
Rs (mn) 2014 2013 Chg
=====================================================
Net sales 12765.7 11297.2 13%
Cost of goods sold -7959.0 -6936.3 15%
Gross margin 37.7% 38.6% -
Other income 265.3 36.2 632%
Operating margin 35.5% 35.6% -
Finance cost -154.7 -249.0 -38%
Net margin 24.7% 23.3% -
EPS-basic & diluted (Rs) 20.4 17.0 20%
-----------------------------------------------------
Source: KSE notice
=====================================================
Comments
Comments are closed.