Maple Leaf Cement Reports Strong 4QFY24 Earnings

Staff Report:
Maple Leaf Cement (MLCF) announced its 4QFY24 results, reporting consolidated earnings of approximately Rs1.52 billion (EPS of Rs1.45), a 1% increase quarter-on-quarter (QoQ). The result exceeded expectations, mainly due to higher-than-anticipated gross margins.

Alongside the results, the company announced a Rs1.0 billion loan to its holding company, Kohinoor Textile (KTML), and a Rs1.0 billion loan to its associate, Maple Leaf Capital.
The company recorded gross margins of 38% in 4QFY24, compared to 30% in 3QFY24 and 28% in 4QFY23. The improvement in gross margins on both a QoQ and year-on-year (YoY) basis is attributed to higher domestic retention prices and a more cost-efficient fuel and power mix, according to industry sources.

Net revenue increased by 5% YoY but decreased by 2% QoQ to Rs15.7 billion in 4QFY24. The YoY revenue growth was driven by higher domestic retention prices, while the QoQ decline was due to lower domestic dispatches.

Domestic dispatches for 4QFY24 decreased by 7% YoY and 5% QoQ to 0.85 million tons, while export dispatches increased by 52% YoY and 106% QoQ to 0.05 million tons.

Distribution expenses in 4QFY24 rose by 71% YoY to Rs1.36 billion, primarily due to inflationary pressures and the implementation of axle load regulations.

The effective tax rate for 4QFY24 stood at 50%, compared to 35% in 3QFY24 and 121% in 4QFY23. For FY24, the effective tax rate was recorded at 36%, down from 46% in FY23.

MLCF’s earnings for FY24 increased by 19% YoY to Rs6.89 billion, mainly due to improved gross margins and a lower effective tax rate. Gross margins for FY24 were 34%, up from 31% in FY23, driven by higher domestic retention prices and lower fuel and power costs.

The company is currently trading at a FY25 estimated price-to-earnings (PE) ratio of 4.0x, with a dividend yield of 5%.