Fauji Cement Posts Profit of Rs. 5 Billion for 1HFY23

Fauji Cement Company Limited (FCCL), one of the biggest cement manufacturers in the country, has announced its financial results for the six months that ended on December 31, 2022 (1HFY23).

The company has posted a profit after tax (PAT) of Rs. 5.079 billion in 1HFY23, up 34 percent compared to the PAT of Rs. 3.787 billion reported in the same period of last year.

The company reported earnings per share (EPS) of Rs. 2.07 in 1HFY23 compared to an EPS of 1.54 reported in the same period of the previous year.

During 2QFY23, the company’s earnings arrived at Rs. 2.764 billion against Rs. 1.683 billion last year, up by 64 percent year-on-year (YoY). The company reported earnings per share (EPS) of Rs. 1.13 in 2QFY23 compared to an EPS of 0.69 reported in the same period of the previous year.

During 2QFY23, sales showed a jump of 38 percent YoY as a result of a surge in retention prices which offset the impact of a 10 percent decline in dispatches to 1.39 million tons.

During 1HFY23, revenue rose by 33 percent YoY owed to robust retention prices. The gross margins arrived at 27 percent in 2QFY23, stable over last year (2QFY22: 27.4 percent), as higher retention prices offset the impact of higher coal costs, the depreciation of the Pakistani Rupee, and augmented energy tariff, according to a report by Arif Habib Ltd.

On a sequential basis, margins compressed from 28.7 percent in 1QFY23 led by recognition of costs associated with the new line (Commercial Operations Date (COD) October 2022) as well as augmented cost pressures noted earlier.

This took the margins in 1HFY23 to 27.7 percent compared to 28.4 percent in 1HFY22 emanating from adverse movement in coal, PKR-USD parity, hike in energy tariff, and augmented costs of the new plant which offset the price hikes undertaken during the year.

The finance cost of the company rose by 68 percent YoY owed to borrowing on account of expansions, coupled with higher interest rates. The company booked effective taxation at 30 percent in 2QFY23 compared to 40 percent in the same period of the previous year.

Moreover, the company’s brownfield cement expansion of 1.95 million tons at Nizampur achieved COD in October 2022, taking the total capacity of the company (Fauji + Askari) to over 8 million tons per annum. It is now the third-largest player in the country. The Greenfield expansion at DG Khan Cement (2.05 million tons) is expected to come online by the end of this year.