Kohat cement (KOHC) announced its Half Yearly result of FY2021 where it posted net profit of PKR 1.47 billion as compared to PKR 97 million in same period last year. Sales revenue of the company increased massively amid incerased demand from construction sector. During July-December 2020 period, company sales reached PKR11.1 billion as compared to PKR6.02billion in same period in previous year.

Company was able to increase its gross margins on back of better retention price per cement bag. Gross margins improved to 23.3% a compared to just 2.5% in same period last year.

The turnaround in the profitability of the company comes despite higher finacne cost of PKR 274 million as compard to PKR 19.4million in same period last year. KOHC has huge debt on its balancesheet primarily to fund its projects.

Kohat Cement is currently engaged in three projects with total cost of PKR 3.5 billion by using debt/equity components. It is setting 100tph low pressure coal fired boiler power plant with net power generation capacity of 16.2MW (PKR 1billionn cost with commissioning target of 4QFY22).

Secondly, optimization of pyro process of line 3 to produce fuel and power costs (PKR 1.2billion cost with commissioning target of 2QFY22).

Thirdly, cement grinding mill of 300tph capacity (PKR 1.3bn cost with commissioning target of 3QFY23). These projects will improve efficiencies of plants.

The company has now announced a Greenfield expansion in Punjab . KOHC will setup an additional cement production facility of ip to 2.5million tons per annum with an estimated cost of PKR 35bn. The expected debt ratio could be at 60%. Exapnded capacity is projected to come online in 2023-2024.

Keeping in view the expnsion projects and resultant requirement of funding, it is expected that Company may curtail its dividends in near term and resort to further borrowings which may further increase finance cost, going onwards.

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