Lahore: D.G. Khan Cement Company Ltd. (DGKC) revealed its financial results for FY24, marking a recovery with annual earnings of PKR 542 million, a significant turnaround from the previous year’s loss of PKR 3.6 billion.

According to AKD Securities Limited, despite a challenging fourth quarter where DGKC posted a loss of PKR 1.7 billion, the company managed to improve year-over-year. This period’s results were notably impacted by lower-than-expected gross margins and a heightened tax charge due to changes in tax policy affecting exports. The quarter’s gross margins contracted sharply to 7.9% from the previous quarter’s 25.5%, significantly below the forecasted 15.2%.

The company’s revenue in 4QFY24 remained stable at PKR 17.0 billion, with a decrease in off-takes being offset by higher cement prices. However, the mix shift towards more exports contributed to the margin pressure. Operating expenses for the quarter rose by 24% year-over-year to PKR 1.3 billion, influenced by a 32% increase in export volumes.

Tax expenses for the quarter were recorded at PKR 877 million, bringing the total for the year to PKR 2.3 billion. This resulted in an effective tax rate (ETR) of 81%, significantly influenced by the deferred tax charge following the revised exports taxation regime, a stark contrast to the previous fiscal year’s ETR of 215%.

AKD Securities maintains a ‘Buy’ stance on DGKC, with a target price of PKR 109 per share by June 2025, indicating a potential capital upside of 37%.