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Fauji Cement records Rs582 million profit

                                                                                        The Express Tribune
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Fauji Cement records Rs582 million profit

Published: October 22, 2013
The sharp increase in sales due to higher prices and improved volumetric sales were the core factors that drove the profitability. PHOTO: FILE
KARACHI: 
Fauji Cement – an associated company of one of the largest business conglomerates in Pakistan, Fauji Group – has reported an impressive profit after tax of Rs582 million, up 61% in first quarter of fiscal year 2013 against a profit of Rs361 million in the same quarter of the preceding year.
The extraordinary performance of the company in the first quarter has also raised its earnings per share (EPS) to Rs0.44 from Rs0.27 in the corresponding period.
According to Summit Capital, the company performed well due to sharp increase in its top line which was up by 12% year on year (YoY) and improved gross margins due to higher cement prices and lower key input cost that is coal prices in international market.
The company also benefitted from a sharp decline in its financial charges and higher other income. Moreover, the company has paid corporate tax at an effective rate of 30% as against the tax payment at an effective tax rate of 31% in the first quarter of the preceding year (1QFY13).
The sharp increase in sales due to higher prices and improved volumetric sales were the core factors that drove the profitability.
Fauji cement reported about 4 basis points (bps) jump in its gross margin due to higher cement prices in domestic market and lower coal prices in international market that reduced the production cost of the company.
Moreover, the decline in financial charges was primary because of the loan repayment as the company has repaid major loans of about Rs2.25 billion in fiscal year 2013, which seems to be the major reason behind the decline in financial charges.
On the other hand, the company has reported a handsome upsurge of over three times in other income to Rs52 million as against the other income of Rs14 million during the same period last year.  Resultantly, the company’s profit before tax reached Rs835 million in 1QFY13 as against Rs526 million in corresponding period of last year.
The brokerage house reported that Fauji Cement holds better future prospects as it enjoys a share of about 6.75% in domestic sales or local dispatches while its share in exports is around 6%.
The domestic market will continue to perform well on the back of higher prices, higher allocation of the funds to Public Sector Development Program (PSDP) and ongoing work on mega projects, Summit Capital reported.
On cement export front, the report said, the recommencement of construction activities in Gulf countries along with the other economies that are coming out of recession gradually will put a positive impact on Pakistan’s cement exports in the near future.
Published in The Express Tribune, October 22nd, 2013.

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