⚡ Flash Summary
Cherat Cement Company Limited’s Q1 2025 results reveal a mixed performance. While sales volumes increased by 19% year-over-year, driven primarily by domestic sales growth of 23%, revenue only grew by 6% due to increased production costs. Net profit after tax declined significantly to Rs. 2,095 million compared to Rs. 2,878 million in the same period last year. The company is focusing on optimizing its power mix and cost rationalization measures to improve profitability, which may provide a stronger outlook in the future.
📌 Key Takeaways
- 📈 Overall industry demand increased by 18%.
- 🚚 Domestic dispatches increased by 17%, export volumes grew by 21%.
- 🌍 Exports to Afghanistan surged by 32%.
- 💰 Total sales volume increased by 19% (domestic +23%, exports +8%).
- 💸 Sales revenue increased by 6% overall (local +8%, export +2%).
- ⚠️ Cost of sales increased by 13% due to increased production.
- ⚡️ Savings achieved in combustion and power costs through process optimization.
- ⛽ Measures taken to offset gas tariff hikes by optimizing power mix.
- 📉 Finance costs decreased substantially by 39% due to loan repayments.
- 🏦 Other income increased due to improved liquidity.
- 😕 Profit after tax decreased to Rs. 2,095 million (vs. Rs. 2,878 million last year).
- 💸 Earnings per share decreased to Rs. 10.79 (vs. Rs. 14.81 last year).
- ☀️ Adding further solar power plant to optimize the power mix
- 🚧 Expect cement demand to grow moderately, supported by private-sector residential construction.
- 🌊 Post-flood rehabilitation work may fuel growth.
🎯 Investment Thesis
HOLD. While Cherat Cement is taking steps to improve its operational efficiency and manage costs, the Q1 2025 results indicate a concerning decline in profitability. The company’s efforts to optimize energy mix and reduce finance costs are encouraging, but it’s unclear if these measures will be sufficient to offset the impact of higher production costs and pricing pressures in the near term. Until there is clear evidence of a turnaround in profitability and EPS growth, a HOLD rating is warranted. Consider downgrading the recommendation if future earnings remain suppressed.
Disclaimer: AI-generated analysis. Not financial advice.