Ayesha Mudassar

Cherat Cement Company Limited (CHCC)’s revenue and gross profit increased by 11.3% and 6.1%, respectively, in the first quarter (1QFY24) of the ongoing fiscal year compared with 1QFY23, according to WealthPK. During 1QFY24, the company made net sales of Rs10.07 billion, earning a gross profit of Rs3.07 billion. The company posted a net profit of Rs1.53 billion resulting in an earnings per share of Rs7.89 during 1QFY24.

In comparison with 1QFY23, the net turnover increased by 11.3% from Rs9.04 to Rs10.07 in 1QFY24. The improved sales were mainly due to the upward adjustment in the cement prices on account of higher input costs. Furthermore, the company’s exports to Afghanistan increased during the quarter under review. Moreover, the cost of sales increased by 13% mainly due to higher fuel, power, and packing material costs.

However, the financial costs for the period experienced a 12% reduction, declining from Rs480.1 million to Rs424.5 million, which signifies the effective implementation of financial discipline to stop the escalating finance cost and to successfully achieve efficiency across all the operations. Cherat Cement Company Limited, which operates as a subsidiary of Ghulam Faruque Group, is one of the leading cement manufacturers in Pakistan, with a production capacity of 45,000 tonnes per day.

Four years at a glance

Historical financials Historical analysis of CHCC sales shows that in the last four years, the company earned the highest revenues in FY2023. From sales of Rs17.09 billion in FY20, the company's revenue increased to Rs25.20 billion in FY21. Furthermore, the company posted Rs32.08 billion in sales in FY22 and Rs37.38 billion in FY23.

Concerning net profit, the company’s historical performance fluctuated over the years.
During the last four years (2020-2023), the firm posted the highest net profit of Rs4.45 billion in FY22. The company posted a net loss of Rs1.89 billion in FY20. Moreover, the company posted a net profit of Rs3.20 billion in 2021. The cement company posted the highest four-year EPS of Rs22.93 in FY22. However, it suffered a loss per share in FY20.

Historical profit ratios

In the last four years, CHCC posted the highest gross profit ratio of 27.9% in 2022 and the lowest gross profit ratio of 2.26% in FY20. The company reported the highest net profit ratio of 13.89% in 2022.

Industry overview

During the quarter, the sales increased by 24% on an aggregate basis. The local demand for cement went up by 18% mainly due to the base year effect and floods in the corresponding period last year. Export volumes rose by an impressive 72%, primarily driven by an 82% increase in sea exports.

Credit: INP-WealthPk