Cherat Cement profits hit by high cost of sales in 1HFY20

Cherat Cement Co Ltd (CHCC) of Pakistan has announced its financial result for 1HFY20 through Pakistan Stock Exchange (PSX) on 12 February 2020. It posted a loss after tax (LAT) of PKR560.1m (US$3.63m) during the first six months of FY20, against a profit after tax of PKR1.02bn earned during the same period last year. The high cost of sales and financing component impacted the company’s bottom line.

Although the net sales of company increased to PKR9.5bn from PKR 7.03bn, cost of sales rose to PKR8.8bn from PKR5.7bn during this accounting period.

However, a bourse filing from the company’s CEO, Azam Faruque, says that the distribution cost and other expenses fell to PKR336m from PKR382m during this reporting period.

According to a note in the company’s previous report, to rationalise its production costs, it had signed wheeling regime energy purchase agreement with Pakhtunkhwa Energy Development Organization for the supply of up to 3.8GWha electricity at a cheaper tariff. The company also intends to install 12.6MW solar panels at the factory to reduce its electricity costs. Furthermore, the gas line to the factory will be commissioned shortly. In a highly-competitive and challenging business environment, these cost-controlling measures will reduce production costs.