KARACHI: DG Khan Cement (DGKC) posted net earnings for the FY15 at Rs7.63 billion, translating into earning per share (eps) at Rs17.40, representing growth of 28 per cent from Rs5.97bn (EPS: Rs13.62) in fiscal year 2014.

In the fourth quarter of hscal year 2015 alone, earnings increased by 14pc quarter on quarter to Rs5.14 per share. The results announced on Monday, beat market expectations. The board also proposed a final cash dividend at Rs5 per share.

Analysts at AKD Securities observed that the key reasons for earnings performance were improvement of 80bps YoY in gross margins, which settled at 42.4pc during fourth quarter of fiscal year 2015 fueled by falling coal prices; reduction in administrative and selling expenses by 38pc YoY.

An 18pcYoY decline in borrowing costs due to lower interestrates and deleveragingofbalance sheet.

Cement sector analyst Nabeel Khursheed at Topline Securities stated that in fiscal year 2015, DGKC`s revenue clocked in at Rs26.1bn, down by 1.6pc YoY, primarily due to 35pc decline in exports.

Exports remained dull mainly on the back of lower dispatches to South Africa (SA) as a result of antidumping duty. However decline in coal prices by 23pc YoY in fiscal year 2015, coupled with lower power tariff contributed positively towards company margins.

As a result, gross profit margins improved by 134bps YoY to 36.2pc.

Analysts, however, flagged following risks to future earning growth: cartel breakdown leading to price war; higher than anticipated increase in gas tariff; abnormal rise in international coalprices, and delay in commencement of construction projects across the country.

In the QFY15, the company declared earnings of Rs2.3bn (EPS Rs5.1) as against Rs2bn (EPS Rs4.6) in the same quarter last year.

Identifying key takeaways, analysts said that despite total dispatches falling by 8pc YoY to 0.9 million tonnes, DGKC recorded revenues of Rs7.2bn in 4QFY15, up by 3.2pc YoY.

This was probably due to higher netretention prices. Financial costs during 4QFY15 declined by 18.40c YoY to Rs31m thanks to multi-decade low policy rate.

Moreover, lower international oil prices led to 38pc YoY lower selling and distribution costs which supported the company`s net earnings.

DGKC reported other income of Rs604m, up by 65.8pc YoY in which 68pc contribution came from MCB`s dividend income of Rs409m.