Lahore: DG Khan Cement Company Limited (DGKC) conducted its corporate briefing to discuss recent financial results and future outlook. To recall, DGKC reported a Fiscal Year 2024 Earnings Per Share (EPS) of Rs1.24, a significant improvement compared to a Loss Per Share of Rs8.3 for the previous fiscal year. For the first quarter of Fiscal Year 2025, the company announced an EPS of Rs1.84, marking a 22% year-on-year increase.
According to JS Global, the management of DGKC indicated that they anticipate local demand for cement to remain sluggish for the remainder of the financial year. As a result, they are exploring export markets to offset fixed costs. Additionally, they noted that demand recovery from potential interest rate cuts is unlikely to materialize until at least next year. The company's dispatches during the first four months of Fiscal Year 2025 increased by 4% year-on-year, driven by a 57% year-on-year jump in exports. Conversely, local dispatches for the company declined by 14% year-on-year, slightly better than the industry's overall decline of 15%.
Management highlighted a significant regional price variation, with the North region's Maximum Retail Price (MRP) standing at Rs1,400-1,450 per bag, compared to Rs1,200-1,250 per bag in the South. This regional price difference, along with a higher export sales mix and outdated technology, contributed to DGKC's lower margins compared to peers. However, the management is optimistic about margin improvements on a year-on-year basis moving forward.
The briefing also touched upon the impact of the Afghan government's reduction in export duties, which could lead to a decrease in Afghan coal prices by Rs2,000-3,000 per ton, bringing the price down to approximately Rs38,000-39,000 per ton. A similar reduction in local coal prices is anticipated. The current retention price for cement in the North region is Rs17,000 per ton, while in the South it is Rs14,000 per ton.
To boost capacity utilization and dilute fixed costs, DGKC is actively focusing on expanding its presence in export markets. Clinker exports target key destinations such as Bangladesh and Sri Lanka, with current pricing around US$29-30 per ton, while primary cement markets include the U.S and Madagascar. The company recently added 3.3 MW of solar power at its Kallar Kahar plant, raising the plant's solar capacity to 9.9 MW. As the financial burden decreases, further solar installations and windmills at the Hub site are being considered.
The company is fulfilling most of its energy requirements through captive power generation, utilizing the grid only when necessary. Currently, furnace oil costs approximately Rs33-34 per unit, while coal plant costs range from Rs22-26 per unit, depending on the plant. Meanwhile, the grid rate stands at Rs45-48 per unit. Due to anticipated gas unavailability, DGKC has shifted from gas to coal power at their DG plant, as it is comparatively cheaper. The company is being charged for gas as per RLNG rates at Kallar Kahar.