DG Khan Cement Profit Surges 169% in 1QFY26
Earnings driven by higher dispatches and lower coal costs; margins soften QoQ amid normalized taxation.
D.G. Khan Cement Company Limited (PSX: DGKC) reported unconsolidated net earnings of Rs2.16 billion for the first quarter of FY26, translating into earnings per share (EPS) of Rs4.9, up 169% year-on-year from Rs804 million (EPS: Rs1.8) in the same period last year, the company said in its financial results announced Thursday. The performance, however, came in slightly below market expectations due to weaker-than-anticipated gross margins.
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Revenue for the quarter rose 29% year-on-year to Rs19.8 billion, driven primarily by a 21% increase in volumetric sales. The strong sales momentum was supported by both domestic demand recovery and improved export offtake, aided by better international prices. Gross margins improved to 22% in 1QFY26 from 20% a year earlier, benefiting from lower coal prices and stronger export earnings.
Coal remains the key fuel cost component for cement producers, and DGKC’s profitability was supported by reduced input prices, particularly for Afghan and South African coal, which have fallen notably since mid-2024. The company also benefited from improved cost efficiency and operational optimization at its Dera Ghazi Khan and Hub plants.
Finance costs dropped sharply by 73% year-on-year to Rs431 million, reflecting reduced borrowing levels and the impact of monetary easing. Other income stood at Rs1 billion, slightly lower than the Rs1.03 billion reported in the same period last year. On a sequential basis, however, quarterly earnings fell 32% due to lower gross margins and normalized taxation following deferred tax reversals in the previous quarter.
DGKC’s effective tax rate for 1QFY26 was recorded at 37%, compared to 39% in the same period last year. The company’s operational metrics remained healthy, with export volumes rising amid a stable rupee and steady regional demand.
Analysts noted that despite the sequential decline, DGKC’s earnings momentum remains positive on an annual basis, supported by easing coal costs, strong export pricing, and sustained construction activity. With the State Bank maintaining a softer monetary stance, cement manufacturers like DG Khan Cement are expected to continue benefiting from lower financing costs and improved sector dynamics through FY26.