Thatta Cement Company Limited (PSX: THCCL) achieved a significant profit boost in the first quarter of FY25, posting a 392% increase in after-tax profit due to strategic cost reductions and increased revenues. The company reported a profit of Rs596.85 million [EPS: Rs7.05] for the quarter ending September 2024, a considerable jump from Rs121.31 million [EPS: Rs1.43] in the same period last year (SPLY).
Dividend Announcement and Financial Highlights
In addition to its stellar earnings, Thatta Cement’s board of directors announced an interim cash dividend of Rs0.5 per share, equating to a 5% payout for shareholders. The company’s total revenue for Q1 FY25 grew by 17.1% to Rs1.72 billion, up from Rs1.47 billion in SPLY, as increased domestic demand and optimized sales contributed to top-line growth.
The cost of sales declined 21.6% year-on-year, driven by cost-saving initiatives and operational efficiencies. This led to a notable 243.8% increase in gross profit, which rose to Rs736.36 million from Rs214.16 million in SPLY. Consequently, Thatta Cement’s gross margins jumped to 42.8%, compared to 14.6% in the previous year.
Additional Income and Lowered Expenses Boost Bottom Line
Other income surged 416.7% to Rs357.84 million during Q1 FY25, largely contributing to the company’s improved financial standing. Meanwhile, administrative expenses decreased by 8.6% to Rs36.08 million, while selling and distribution expenses fell 12.5% to Rs11.73 million. However, other operating expenses increased significantly by 375.6% to Rs70.95 million, reflecting higher operational spending.
Increased Financial and Tax Costs
Finance costs increased by 24.0% to Rs18.19 million, mainly due to rising interest rates. The company’s tax expense also climbed to Rs360.4 million from Rs79.64 million in SPLY, a 352.5% rise, leading to an effective tax rate of 37.6%.
Outlook and Conclusion
Thatta Cement’s strong performance in Q1 FY25 highlights its successful implementation of cost-optimization measures alongside revenue growth. As the company continues to focus on improving operational efficiencies, this quarter’s results underscore its ability to sustain profitability even amidst higher interest rates and increased taxation.
Unconsolidated Financial Results for Q1 FY25 (in ‘000 Rupees)
| Metric | Sep 2024 | Sep 2023 | % Change |
|---|---|---|---|
| Sales | 1,721,214 | 1,470,533 | +17.05% |
| Cost of Sales | (984,855) | (1,256,375) | -21.61% |
| Gross Profit | 736,359 | 214,158 | +243.84% |
| Administrative Expenses | (36,083) | (39,483) | -8.61% |
| Selling & Distribution Expenses | (11,725) | (13,399) | -12.49% |
| Other Income | 357,838 | 69,258 | +416.67% |
| Other Operating Expenses | (70,946) | (14,917) | +375.61% |
| Finance Cost | (18,188) | (14,664) | +24.03% |
| Profit Before Tax | 957,255 | 200,953 | +376.36% |
| Taxation | (360,404) | (79,641) | +352.54% |
| Net Profit | 596,851 | 121,312 | +392.00% |
| Earnings per Share (EPS) | 7.05 | 1.43 | – |
