KOHC earning expects 27% decline in 1HFY19

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Kohat Cement Company Limited (KOHC) is scheduled to unveil its financial result on 21st Feb’19, whereby we expect the company to post earnings of PKR 671mn (EPS: PKR 3.34) in 2QFY19, down by 9% YoY from PKR 741mn (EPS: PKR 3.69) in SPLY.

Analysts forecast topline of the company to arrive at PKR 4,345mn, depicting a growth of 26% YoY on the back of 7% YoY uptick in dispatches to 618k tons together with higher retention prices.

Albeit, margins are projected to compress to 26% vis-à-vis 34% in SPLY led by 26% depreciation in the Pak Rupee against US Dollar and 10% YoY higher average coal prices.

This will take the cumulative PAT for 1HFY19 to PKR 1,199mn (EPS: PKR 5.97) compared to PKR 1,644mn (EPS: PKR 8.19), down by 27% YoY.

Although company sales remained robust at PKR 7,865mn (up by 15% YoY given 2% uptick in dispatches and higher prices), weaker gross margins at 25% (1HFY18: 37%) adversely effected bottom-line in 1HFY19.