Karachi, November 25, 2022 (PPI-OT): DGKC: Corporate briefing session key takeaways

DG Khan Cement Limited (DGKC) held its corporate briefing yesterday to discuss the FY22 results and outlook. To recall, company for FY22 reported a profitability of Rs3.0bn (EPS Rs6.78), decline of 20% YoY. For 1QFY23, company reported profitability of Rs389mn (EPS Rs0.89), down by 57% YoY. We present key takeaways from the briefing session.

Management shared that the company used Shredded tyres and poultry waste at its DG plant whereas straws and rice husk at the south plant for fuel purposes during the outgoing quarter. Cost of Shredded tyres is around US$90/ton and has a higher heating value of 9,000kcals as compared to 6,000kcal for coal.

Management shared the present Coal mix of the company which includes 50% imported coal whereas the rest of the 50% comes from Afghan and local coal. The company now plans to increase the quantum of local and Afghan coal in its mix.

Retention price for the company in the local market is a little over Rs13.3k/ton in the northern region and 12.5-13k/ton for the south region.

As per management, company has increased the consumption from national grid due to gas shortages. The company is in the process of installing a 6.9MW solar power plant at its Kallar Kahar plant.

According to management, the company might go for an expansion in two years’ time after its leverage issues are sorted.

The management while answering a question whether a possible disturbance in prices is likely or not due to cement capacities coming online shared the view that it has almost always happened in the past and cannot be ruled out. DGKC expects a double-digit decline in local cement dispatches for FY23.