FCCL's profitability remains under pressure

February 21, 2020 (MLN): The first half of the current fiscal year remained challenging for the Fauji Cement Company Limited (FCCL) as it has observed 73.5% YoY decline in its net profits after tax to Rs 482 million from Rs 1.8 billion reaped in Jul-Dec 2018.

This translated into the company’s earnings per share (EPS) which exhibited a decline of 73.48% YoY from Rs 1.32 per share to Rs 0.35 per share.

The slowdown in economic activity, lower cement demand, high-interest rate, abrupt introduction of the axle load limitation, lower retention prices and higher material during the period has hampered the company’s profitability.

Revenues of the company declined by 8.38% YoY to Rs 9.55 billion as the implementation of Axle load limitation and lower retention prices due to online of additional new capacities have squeezed company’s dispatches and margins severely.

Cost of production on the other hand also increased by 16% YoY due to the increase in WAPDA tariff and raw material cost.

Evidently, the company performed below market expectations, as various renowned research houses expected the decline in Profit after Tax to be within the range of 62 to 64%.

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