Attock Cement Pakistan Limited (ACPL) reported a significant 96% decline in its quarterly net earnings for the period ended September 30, 2024, reflecting a net profit of Rs61.91 million [EPS: Rs0.45]. This is a stark contrast to the Rs1.54 billion [EPS: Rs11.23] profit posted in the same period last year (SPLY).
Key Contributor: Gain on Disposal in Q3 CY23
The substantial drop in net profit is primarily attributed to the company’s one-off gain on disposal of Rs2.2 billion recorded in Q3 CY23. When adjusted for this extraordinary income, ACPL’s underlying financials reveal a positive turnaround. Excluding the disposal gain, the company has recovered from a loss of Rs653.1 million in Q3 CY23 to a net profit in the current quarter.
Top-Line and Gross Profit
ACPL’s sales revenues for Q3 CY24 declined by 3.5%, standing at Rs6.43 billion compared to Rs6.66 billion in Q3 CY23. The decrease in sales outpaced the reduction in cost of sales, which also fell by 3.5% to Rs5.33 billion. Consequently, the company’s gross profit saw a 3.4% drop, settling at Rs1.1 billion for Q3 CY24, slightly lower than Rs1.13 billion in the same quarter last year.
Expenses and Income Breakdown
- Administrative Expenses: ACPL successfully reduced its administrative expenses by 4.8% YoY to Rs191.34 million in Q3 CY24, down from Rs201.05 million in the same period last year.
- Distribution Costs: On the downside, the company’s distribution costs rose sharply by 34.1% YoY to Rs731.32 million, compared to Rs545.23 million in Q3 CY23, reflecting increased operational challenges in selling and distributing products.
- Other Income: ACPL recorded an 8.7% increase in other income, which stood at Rs29.71 million for the quarter, up from Rs27.32 million in Q3 CY23. This additional income helped mitigate the impact of declining core profitability.
- Other Operating Expenses: ACPL managed to cut its other operating expenses by a remarkable 80%, bringing the figure down to Rs5 million from Rs25 million in the same period last year.
Surging Finance Costs
One of the major factors contributing to the overall decline in profitability was the sharp rise in finance costs. The company’s finance costs surged by 252.3% YoY to Rs131.55 million, compared to Rs37.34 million in Q3 CY23. The increase is primarily due to higher interest rates in the country, which raised borrowing costs and pressured the bottom line.
Lower Taxation
ACPL benefited from a significantly lower tax burden during the quarter, paying only Rs3.73 million in taxes compared to Rs1.01 billion in the same period last year. The reduced tax liabilities provided some relief to the company’s earnings.
Summary of Financials (Unconsolidated – Un-audited)
For the quarter ending September 30, 2024, Attock Cement Pakistan Limited (ACPL) reported a decrease of 3.5% in sales, generating Rs6.43 billion compared to Rs6.66 billion in the same period last year. The cost of sales also declined by 3.5%, amounting to Rs5.33 billion from Rs5.53 billion. This resulted in a 3.4% drop in gross profit, which stood at Rs1.10 billion, slightly lower than Rs1.13 billion recorded in the same quarter of 2023.
Administrative expenses were reduced by 4.8%, down to Rs191.34 million from Rs201.05 million. However, distribution costs increased significantly by 34.1%, reaching Rs731.32 million compared to Rs545.23 million last year.
Other income saw an improvement of 8.7%, increasing to Rs29.71 million, while other operating expenses declined sharply by 80%, standing at Rs5 million for the quarter.
Finance costs surged dramatically by 252.3%, rising to Rs131.55 million from Rs37.34 million, reflecting the impact of higher interest rates.
Pre-tax profits fell by 97.4%, amounting to Rs65.64 million, down from Rs2.55 billion a year earlier. The company benefited from a substantial reduction in tax liabilities, paying Rs3.73 million in taxes compared to Rs1.01 billion last year.
As a result, net profit for the period dropped by 96%, reaching Rs61.91 million from Rs1.54 billion. Earnings per share (EPS) for the quarter stood at Rs0.45, down from Rs11.23 in the same period last year.
Conclusion
Attock Cement’s financial results reflect a challenging quarter, with profitability sharply impacted by higher finance costs, lower sales, and the absence of a one-time gain from the previous year. However, the company has shown signs of operational recovery, posting a net profit after excluding non-recurring gains from Q3 CY23. ACPL’s ability to navigate rising costs and maintain profitability will be critical in the upcoming quarters, as it faces ongoing economic pressures in both local and international markets.
