Fauji Cement Company Limited (PSX: FCCL) reported a robust financial performance for the quarter ending September 2024, with a 24.2% year-over-year increase in net profit, amounting to Rs3.25 billion (EPS: Rs1.32). This boost in profitability reflects the company’s effective cost optimization strategies and increased revenue, which rose 13.0% to Rs22.96 billion compared to Rs20.31 billion in the same period last year (SPLY). FCCL’s shares responded positively, climbing nearly 7% during intraday trading on Friday.
Key Drivers of Profit Growth
The company’s gross profit jumped by 24.7% to Rs7.88 billion, largely attributed to improved domestic sales, steady pricing, and cost-reduction initiatives. Gross margins improved from 31.1% in the same quarter last year to 34.3%, driven by the company’s strategic measures to increase efficiency. FCCL’s higher reliance on local coal and alternative fuels, along with an expansion in solar power generation, allowed the company to mitigate costs, especially in power consumption. This optimization of fixed costs was instrumental in improving overall profitability.
In addition to these operational efficiencies, FCCL also reported a substantial increase in other income, which rose by 213.4% to Rs494.09 million, up from Rs157.64 million in SPLY. This further boosted the company’s financial results, adding strength to its earnings performance.
Cost Analysis and Financials
On the expenses front, administrative expenses increased by 15.9% year-over-year, reaching Rs413.67 million, while other operating expenses rose 29.3% to Rs362.61 million. However, selling and distribution expenses fell slightly by 1.5% to Rs693.3 million, reflecting FCCL’s ability to contain these costs amid rising revenues.
The company’s finance cost increased by 48.3% to Rs1.68 billion, up from Rs1.13 billion in SPLY, due to higher prevailing interest rates, which impacted the company’s borrowing expenses.
Fauji Cement’s effective tax rate also increased to 38.0%, up from 34.8% in the same quarter last year, with tax payments totaling Rs1.99 billion, a 42.5% increase from the Rs1.39 billion paid in SPLY.
Financial Summary (Un-audited Results for Quarter Ending September 30, 2024)
