FCCL: Profitability soars by 34% YoY in 1HFY23

February 14, 2023 (MLN): Fauji Cement Company Limited (FCCL) has reported net profits of Rs5.08 billion (EPS Rs2.25), witnessing a growth of 34.12% YoY for the six months ending December 31, 2022, compared to the same period last year (SPLY), as per the financial statement revealed by the company to PSX on Tuesday.

The turnover of the company has increased by 32.85% YoY to Rs33.67bn against Rs25.35bn in SPLY while the cost of sales surged by 34% YoY Rs24.34bn in 1HFY23.

Other income of the company in the review period went down by 22.61% YoY to Rs75.6 million.

On the cost front, the finance cost has surged by 49.61% YoY to clock in at Rs898mn in the 1HFY23.

Meanwhile, the selling and administrative expenses stood relatively flat at Rs266.6mn. At the same time, the administrative expenses moved up by Rs751.42mn in the review period.  

FCCL has paid Rs2.20bn in terms of taxation as compared to Rs1.79bn paid in the corresponding period last year.

According to the company, high inflationary pressure, a hike in the policy rate, and massive rupee devaluation have dampened the overall cement demand.

Similarly, low GDP growth, high cost of raw materials, and cut in PSDP has declined cement dispatches by 21% YoY in 1HFY23.

To note, in the second quarter cement dispatches rebounded by 30% as compared to Q1 (1.39mn tons versus 1.1mn tons) as the impact of flooding in the country receded and dispatches to large projects mainly hydropower dams picked up meeting the specific technical specifications of those projects.

During 1HFY23, dispatches of 2.5mn tons (including 9.8% sales of ‘Green Cement’) were achieved as compared to 2.9mn tons in SPLY, plummeting by 14% YoY.

“Our initiatives of using higher local coal and increase in captive green energy generation helped keep the overall cost per ton in check despite the above-mentioned external factors,” as per the statement.

On a quarterly basis, the company earned a profit after tax of Rs2.8bn in Q2 as compared to Rs2.3bn in Q1.

The company successfully achieved commercial operations of its new cement manufacturing line having a clinker capacity of 6,500 tons per day at Nizampur as per plan.

D.G. Khan Expansion

Greenfield Expansion at D.G. Khan is expected to be completed by end of this year.

Solar power generation at our sites is now 29 MW, post-completion of 8.6 MW at the Wah plant site. By Quarter 3, 2023, this will increase to 40 MW with the commissioning of an 11 MW solar power project at Nizampur in October 2023.

Consequently, up to 60% of all power requirements will be met by either solar power or waste heat recovery power projects. The cost per ton saving is Rs110 per ton of cement produced.

The energy mix at all sites is paying dividends resulting in a saving of Rs195 per ton of cement produced. This was achieved by substituting imported coal with local or Afghan coal and use of alternative fuels.

HR optimization and other initiatives have resulted in a saving of Rs170 per ton of cement produced.

The company successfully implemented an ERP SAP system with GO-Live achieved in December 2022.

It is expected that cement dispatches may further slow down in the future due to the ongoing economic slowdown.

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