Cherat Cement Company Limited (PSX: CHCC) has announced a remarkable financial performance for the first quarter of FY25, with a net profit soaring by 87.7% to Rs2.88 billion, resulting in earnings per share (EPS) of Rs14.81. This substantial increase in profit is primarily attributed to enhanced gross margins and a significant reduction in tax expenses. Following the announcement, Cherat Cement’s shares surged over 7%.
Revenue and Cost Analysis
Despite the impressive profit growth, Cherat Cement’s revenue experienced a slight decline of 4.1%, dropping to Rs9.66 billion from Rs10.07 billion in the same quarter of the previous year (SPLY). However, the company benefited from a considerable reduction in the cost of sales, which fell by 17.3%, contributing to a gross profit increase of 25.9% to Rs3.87 billion. As a result, the gross margin improved significantly, rising to 40.0% from 30.5% in SPLY.
Tax Benefits
One of the most notable factors influencing Cherat Cement’s profit was its effective tax rate, which dropped to 18.3% compared to 32.8% in the same quarter last year. This reduction in tax burden allowed the company to retain more of its earnings, further boosting its profitability.
Other Income and Expenses
During the review period, Cherat Cement reported a remarkable increase in other income, which expanded by 624.1% to Rs348.42 million, up from Rs48.12 million in the previous year. However, the company faced rising operational expenses, with administrative expenses increasing by 16.2% to Rs148.89 million, selling and distribution expenses rising by 27.0% to Rs207.87 million, and other operating expenses climbing by 46.7% to Rs180.19 million.
Finance Cost
On a positive note, the company’s finance costs saw a significant reduction, falling by 63.4% to Rs155.21 million, down from Rs424.53 million in SPLY. This substantial decrease in finance costs further enhanced Cherat Cement’s net profit for the quarter.
Bottom Line Performance
Overall, Cherat Cement Company’s net profit for Q1 FY25 reached Rs2.88 billion, a substantial increase from Rs1.53 billion in the same quarter last year. The significant profit growth demonstrates the company’s effective cost management and ability to navigate challenges in the market.
Looking Ahead
Cherat Cement’s strong financial results for the first quarter suggest a positive outlook for the remainder of FY25. The company’s ability to maintain healthy margins while controlling costs, coupled with a favorable tax environment, positions it well for continued growth in a competitive industry.
Key Metrics
| Metric | Value/Percentage Change |
|---|---|
| Net Profit | Rs2.88 billion |
| Earnings Per Share (EPS) | Rs14.81 |
| Revenue | Rs9.66 billion |
| Revenue Change | -4.10% |
| Cost of Sales | Rs5.79 billion |
| Cost of Sales Change | -17.25% |
| Gross Profit | Rs3.87 billion |
| Gross Profit Change | +25.89% |
| Gross Margin | 40.0% |
| Administrative Expenses | Rs148.89 million |
| Administrative Expenses Change | +16.16% |
| Selling and Distribution Expenses | Rs207.87 million |
| Selling and Distribution Expenses Change | +27.01% |
| Other Income | Rs348.42 million |
| Other Income Change | +624.06% |
| Other Operating Expenses | Rs180.19 million |
| Other Operating Expenses Change | +46.65% |
| Finance Cost | Rs155.21 million |
| Finance Cost Change | -63.44% |
| Profit Before Tax | Rs3.52 billion |
| Profit Before Tax Change | +54.48% |
| Taxation | Rs645.21 million |
| Taxation Change | -13.68% |
