KARACHI: Fauji Cement Company (FCCL) on Monday announced net earnings of Rs1.6 billion in the third quarter ended March 2016, up 63% compared to Rs982 million in the same quarter of previous year, according to a company notice sent to the Pakistan Stock Exchange (PSX).
Earnings per share (EPS) jumped to Rs1.1 compared to Rs0.7 in the same quarter of last year. The result was in line with market estimates, Topline Securities commented.
In the third quarter of 2015-16, FCCL recorded revenues of Rs5.2 billion, up 18% year-on-year (YoY), mainly due to higher local sales that jumped 10%.
Local sales remained robust owing to higher demand from the private sector (DHA, Bahria, Emaar, Fazaia housing schemes, etc) as evident from a 39% YoY credit growth in the construction sector in February 2016.
Gross margins improved 11 percentage points in 3QFY16. The impressive margins were due to a firm pricing arrangement amongst cement players (higher margins on local sales), lower power tariffs that were down Rs3-3.5 per kilowatt hours effective from January 2016 and lower international coal prices.
Financial charges during the quarter fell 48% to Rs95 million, thanks to swift deleveraging and lower policy rate at 6% compared to 8-8.5% last year.
In 9MFY16, FCCL’s revenues stood at Rs15.2 billion, up 13% YoY. This was primarily due to a 15% increase in local cement demand.
However, exports volume remained unimpressive as they dropped 7% owing to weak demand from the Afghanistan market, down 8% in nine months of 2015-16.
FCCL posted after-tax profit of Rs4.3 billion (EPS Rs3.1) in 9MFY16, up 64% YoY.
Major impediments were adverse political developments disrupting ongoing construction projects, depreciation of the rupee against the dollar (around 46% of FCCL’s long-term loan is dollar-denominated) and higher-than-expected energy costs.
Published in The Express Tribune, April 19th, 2016.
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