Attock Cement: The Falcon rises higher

Nine months in to the fiscal, the top line growth for Attock Cement (ACPL) continues to mimic the trend of growth in industry dispatches. Albeit lower than the rate of growth in 1HFY15, the company’s top line managed to grow by 6.8 percent in 3QFY15 when compared to similar period of the previous fiscal.
More importantly, the company continued to make inroads in international markets, especially East Africa, South Africa and Sri Lanka. It has also displayed an encouraging trend of slower growth in the associated cost of production which grew by less than one percent over the same period last year.
Sector analysts had earlier highlighted better plant efficiency as a factor behind the tamed cost of goods sold. Industry pundits had also expected the company to rein in distribution costs on the back of lower fuel costs.
Distribution costs were up by a significant 38.4 percent in 3QFY15, when compared to 3QFY14; a sizeable increase in common size terms over the same period last year. The raked up distribution cost should also be considered in light of the company’s ability to continue boosting sales abroad in an industry that has seen cumulative exports plunge.
Besides core operations, the company’s other operating income tally displayed a sizeable jump of 92 percent, year on year. In no small way, this improvement helped ACPL to register a healthy improvement in its bottom line which was beefed up by almost 17 percent in 3QFY15 against 3QFY14.
On the horizon, the company should be excited by prospects of higher domestic demand from government and private sector, as well as the establishment of a subsidiary in Iraq for which the company is currently working to procure relevant plant and machinery. Besides, it should attain further control over production costs with the establishment of a 40MW captive power plant which is expected to be operational by FY18.

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Attock Cement

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Rs (mn)                      3QFY14    3QFY15      chg

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Sales                          9164      9790       7%

Cost of goods sold             6553      6612       1%

Gross profit                   2611      3178      22%

Gross margin                    28%       32%

Distribution cost               563       780      38%

Administrative expenses         220       264      20%

Other operating expenses        138       170      23%

Finance cost                     17        21      25%

PAT                            1408      1644      17%

Net margin                      15%       17%

EPS (Rs)                      12.29     14.35      17%

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Source: KSE notice