D.G. Khan Cement Reports Higher First-Quarter Profit as Revenue Rises 15.9%

D.G. Khan Cement Company Limited (DGKC) has reported an improvement in its financial performance for the first quarter of FY2026-27, with revenue increasing by 15.9% and profit after tax rising by 7.6% compared with the corresponding period last year. The company’s unaudited financial results cover the quarter ended September 30, 2026.

According to the company’s quarterly report submitted to the Pakistan Stock Exchange, net turnover increased to Rs22.96 billion, compared with Rs19.81 billion in the same quarter of the previous financial year. Profit after tax reached Rs2.32 billion, up from Rs2.16 billion, while earnings per share improved to Rs5.30 from Rs4.93.

Higher Sales Support Financial Performance

The company recorded gross profit of Rs4.94 billion during the quarter, compared with Rs4.30 billion in the corresponding period last year. However, the gross profit margin slightly declined to 21.53% from 21.72%, reflecting pressure from higher input costs.

Coal prices increased significantly during the period, while the company was able to pass only part of the additional cost on to customers. Consequently, higher production and sales volumes were partly offset by increased fuel expenses.

Finance costs also increased to Rs764.49 million from Rs430.59 million, reflecting the financing cost of the USD 101 million facility obtained to fund its investment in Rafhan Maize Products Company Limited (RMPL).

Despite these challenges, improved other income and higher revenue helped the company achieve a stronger bottom-line performance.

Cement Production and Domestic Sales Improve

D.G. Khan Cement reported a notable increase in production during the quarter. Clinker production increased to 1.13 million tons from 899,150 tons, while cement production rose to 1.07 million tons from 940,532 tons.

Total cement sales reached 1.05 million tons, compared with 1.03 million tons in the corresponding period last year. Domestic cement sales, excluding own consumption, increased to 950,773 tons from 874,492 tons, demonstrating improved local market demand.

However, export cement sales declined to 97,008 tons from 155,142 tons. In contrast, clinker sales increased to 509,956 tons from 396,223 tons.

The company attributed its improved operational performance partly to increased kiln operating days, which rose by 24% to 162 days. Clinker capacity utilisation improved to 67% from 54%, while sales utilisation increased to 93% from 85%.

Cement Industry Faces Mixed Market Conditions

Pakistan’s cement industry experienced moderate growth during the first quarter of FY2026-27. Total industry dispatches increased by 3.9% to 13.14 million tons, compared with 12.65 million tons in the same period last year.

Domestic dispatches increased by 7.8% to 10.85 million tons, supported by improved demand in both northern and southern markets. However, industry exports declined by 11.3% to 2.30 million tons.

The closure of the Afghanistan border continued to affect northern cement producers, while regional tensions in the Middle East created additional challenges for export shipments.

Despite these difficulties, D.G. Khan Cement benefited from its southern operations, particularly its Hub facility, which supported export commitments and contributed significantly to higher clinker production.

Expansion and Renewable Energy Projects

Looking ahead, the company is focusing on operational efficiency, production capacity and energy cost reduction.

Installation of an 11,000-ton-per-day brownfield clinker production line at its Dera Ghazi Khan facility is progressing according to plan. Once commissioned, the project is expected to reduce clinker production costs and improve fuel efficiency.

The company has also contracted a 25 MW solar photovoltaic power plant along with a 10 MWh battery energy storage system at the same facility. Electricity generation from the project is expected to commence in March 2027.

These initiatives are expected to help reduce dependence on conventional energy sources, improve operational efficiency and strengthen the company’s competitiveness over the coming quarters.

Investment in Rafhan Maize Products Adds Another Income Stream

D.G. Khan Cement’s 31.07% investment in Rafhan Maize Products Company Limited is also contributing to its financial performance.

The company recognised its first dividend income from the associate during the quarter. Management expects this investment to provide a recurring income stream and diversify returns beyond the cyclical cement business.

This investment is particularly important as the company continues to manage higher financing costs associated with the facility used to fund the acquisition.

Outlook

D.G. Khan Cement expects the remainder of FY2026-27 to remain challenging due to volatile coal prices, energy costs, international geopolitical developments and uncertainty in export markets.

The recovery in domestic cement demand provides an encouraging outlook, although its sustainability will depend on lower borrowing costs, private-sector investment and development activity.

The company’s planned clinker expansion and renewable energy projects are expected to play an important role in improving cost efficiency and supporting future growth.

Overall, DGKC’s first-quarter results reflect stronger revenue, improved production and higher profitability despite considerable cost pressures. The successful completion of its expansion and energy projects, together with a recovery in export markets, will be important factors shaping its performance in the coming quarters.