Karachi, Cherat Cement Company Limited reported a significant decrease in its earnings for the third fiscal quarter of 2024, driven by contraction in gross margins and a decrease in sales volume.

According to AKD Securities Limited, Cherat Cement's earnings for the third quarter amounted to PkR1.2 billion, a 33% decrease from the previous quarter’s profit after tax of PkR1.9 billion. This earnings drop was largely due to a contraction in gross margins and a 14% quarterly decrease in sales volume, which fell to 0.59 million tons from 0.69 million tons in 2QFY24. The company’s net sales also decreased by 33% quarter-over-quarter to PkR8.6 billion.

The contraction in gross margins, which fell by 5 percentage points to 29.6%, was primarily attributed to an increase in gas prices, which constitute about 45-50% of the company’s power mix. However, finance costs decreased by 17% quarter-over-quarter to PkR321 million, likely due to a reduction in borrowings and a slight decrease in average KIBOR rates.

Despite the quarterly challenges, Cherat Cement's profit after tax for the first nine months of FY24 increased by 8% year-over-year to PkR4.6 billion, thanks to improvements in gross margins and lower financial charges.