Fauji Cement’s Profits Rise by 19% During Q2 FY2018

Fauji Cement Company Limited (FCCL) announced its 2QFY18 result today, posting profit after tax (PAT) of Rs 824 million up by 19% YoY as compared to bottom-line profit of Rs 694million during SPLY.

This improvement can be attributed to resumption of Line-II that helped FCCL in reducing cost as the company had been procuring costly clinker from other producers previously.

Whereas 2QFY18 gross margins clocked-in at 26.2% against 21.6% in the same period last year as restoration of line-2 by end of Oct’17 aided margins. Meanwhile, the company registered lower finance costs (PKR 42million), depicting a decrease of 41% YoY.

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Earnings per share (EPS) increased to Rs 0.60 compared with Rs 0.50 in the same period of 2016.

This takes 1HFY18 profitability to Rs 1.28 billion, down 3% YoY from 1HFY17 profitability of Rs 1.30 billion (EPS: PKR 0.94).

FCCL witnessed stagnant topline (1% YoY) during 1HFY18 amid lower cement prices in the north region which eroded the 12% YoY growth emanating from total dispatches.

Gross margins retracted by ~106bps during 1HFY18 to 21.7%, in contrast to 22.8% in 1HFY17 due to higher average coal prices (+20% YoY) and fuel costs.

Moreover, finance cost plunged by 50%YoY to PKR 74 million. In addition to this, effective tax rate clocked in at 28% as compared to 30% in the same half last year which further duly supplemented the bottom-line.

Fauji Cement’s script at the bourse closed at Rs 25.65, down by -3.17% with a turnover of 3.51 million shares.

Fauji Cement (PSX: FCCL) is one of the more prominent cement manufacturers in the industry with its two cement lines located in Jhang Bahtar, Punjab. The plant’s initial capacity was 945,000 tons per annum and subsequently another production line was introduced in 2011. As per capacity today, Fauji has about 7-8 percent market share in the cement industry. The company installed a refuse derived fuel processing plant and also set up a 12 MW of waste heat recovery unit that start to produce electricity for the plant.

The company is part of the larger Fauji group with many associate companies holding shares in Fauji cement as well. As of June 2017, majority of the company’s shares were held by Committee of Admin Fauji Foundation at 36.87 percent.