In the third quarter of 2024, Attock Cement Pakistan Limited experienced a significant shift in its financial performance compared to the same period in 2023. The company’s Condensed Interim Statement of Profit or Loss and Other Comprehensive Income, released for the quarter ended September 30, 2024, reveals a mix of cost challenges and diminished profitability. This article provides a detailed breakdown and analysis of the company’s financials, drawing key comparisons between the two periods.
Revenue Overview: Slight Decline in Sales
For the quarter ended September 30, 2024, Attock Cement generated Rs. 6,426,429 thousand in revenue from contracts with customers, down from Rs. 6,660,121 thousand in 2023. This slight decrease of approximately 3.5% suggests a minor slowdown in sales performance. The drop could be attributed to multiple factors, such as fluctuating market demand, pricing adjustments, or industry-related challenges.
Cost of Sales: Marginal Improvement
The company managed to slightly reduce its cost of sales, which dropped to Rs. 5,331,289 thousand in 2024 from Rs. 5,526,926 thousand in 2023. This reduction reflects improved cost management, potentially due to lower raw material prices or optimized production processes. However, the improvement in cost of sales was not substantial enough to offset the overall decline in revenue.
Gross Profit and Operational Struggles
Despite the slight reduction in cost of sales, gross profit decreased marginally to Rs. 1,095,140 thousand in 2024 from Rs. 1,133,195 thousand in the same period last year. The decrease reflects the combined impact of lower revenue and the company’s struggle to significantly reduce operational costs.
Distribution Costs Surge
One of the more concerning trends in Attock Cement’s financials is the sharp rise in distribution costs. The company incurred Rs. 731,322 thousand in distribution expenses in Q3 2024, a significant increase from Rs. 545,227 thousand in 2023. This rise of approximately 34% indicates heightened logistical expenses, possibly due to inflation, fuel cost hikes, or supply chain disruptions.
Other Expenses and Income
On a positive note, the company managed to substantially reduce other expenses, which dropped to Rs. 5,000 thousand in 2024 from Rs. 25,000 thousand the previous year. In addition, other income saw a modest increase to Rs. 29,708 thousand in 2024, compared to Rs. 27,321 thousand in 2023. This slight boost may have stemmed from better investment returns or income from non-operational activities.
Profit from Operations: Significant Decline
The overall profit from operations has dropped drastically to Rs. 197,190 thousand in Q3 2024 from Rs. 389,243 thousand in 2023. This significant decrease of nearly 50% is primarily due to increased distribution costs and rising finance expenses, which we will explore further.
Absence of Extraordinary Gains
One of the most noticeable differences between the two periods is the absence of extraordinary gains from the disposal of a subsidiary. In Q3 2023, Attock Cement recorded a massive gain of Rs. 2,198,744 thousand, which contributed heavily to its high profit figures. In contrast, no such gain was recorded in 2024, which largely explains the drastic decline in profit before tax.
Rising Finance Costs
Another factor negatively impacting the company’s bottom line is the sharp rise in finance costs. These costs surged to Rs. 131,552 thousand in 2024, a stark increase from Rs. 37,344 thousand in 2023. The increase suggests higher interest expenses, possibly due to increased borrowings or rising interest rates, which could be a sign of financial strain.
Profit Before Income Tax: Sharp Decline
As a result of the absence of extraordinary gains and increased finance costs, Attock Cement’s profit before income tax plummeted to Rs. 65,638 thousand in Q3 2024, down from Rs. 2,546,643 thousand in 2023. This significant drop of more than 97% highlights the company’s challenges in maintaining profitability.
Income Tax Reversal and Final Profit
One silver lining in 2024 is the recording of an income tax reversal of Rs. 24,156 thousand, compared to an income tax expense of Rs. 936,994 thousand in 2023. This reversal might have been due to adjustments from previous tax periods, positively impacting the final profit figure.
However, despite the tax reversal, the profit for the period was just Rs. 61,910 thousand in Q3 2024, compared to Rs. 1,543,643 thousand in the same quarter last year. The company’s profitability has thus taken a significant hit, largely due to the factors discussed above.
Earnings Per Share: Sharp Decline
The impact of reduced profits is also reflected in the basic and diluted earnings per share (EPS), which fell dramatically to Rs. 0.45 in 2024 from Rs. 11.23 in 2023. This significant reduction highlights how the company’s diminished profitability has impacted shareholder value.
Conclusion
Attock Cement Pakistan Limited’s financial performance in Q3 2024 shows clear signs of struggle. The absence of extraordinary gains, rising finance costs, and increased distribution expenses have all contributed to a sharp decline in profits. While the company has managed to reduce some operational costs and benefit from a tax reversal, these factors were not enough to offset the negative trends. As a result, the company’s bottom line and earnings per share have suffered significantly compared to 2023.