Islamabad: Fauji Cement Company Ltd. (FCCL) announced its financial results for FY24, revealing the highest-ever annual earnings in its history, driven by increased sales and strategic operational improvements. The company hosted an analyst briefing to discuss these results and its outlook for the future.
According to AKD Securities Limited, FCCL’s earnings reached a new peak at PkR8.2 billion, up from PkR7.4 billion in the previous year, representing an 11% year-over-year growth. This increase was largely due to a 5% rise in total offtakes, reaching 5.1 million tons, with local sales growing by 3% to 4.56 million tons and exports surging by 24% to 0.52 million tons. Despite this volume growth, the company’s utilization rate dipped to 55% from 65% in FY23 due to expanded capacity.
The briefing detailed significant operational changes, including an increase in the use of locally sourced coal, which now makes up 59% of the company’s coal mix. The use of alternative fuels also rose significantly, from 3.2% in FY23 to 5.2% in FY24, with plans to increase this to between 10-15% in the future. Currently, 58% of FCCL’s power needs are met through its own generation, with an anticipated increase to 65% by FY25 due to added solar capacity.
Management also addressed cost increases stemming from a hike in royalty rates by the Punjab government, which raised the royalty cost from PkR215 per ton to PkR1,600 per ton. The company has managed to pass on approximately 50% of this increase to its prices.
Additionally, FCCL is investing in self-sufficiency with the development of a 15 MW solar captive power project costing PkR1.5 billion, with part of the capacity expected to come online by the end of this month. The company is also acquiring a polypropylene unit for PkR1.0 billion to produce its own cement bags, covering 90% of its needs.
Despite these investments and expansions, FCCL management does not anticipate a significant increase in cement demand for FY25. However, they remain optimistic about potential growth in exports to Afghanistan and possible benefits from lower interest rates and increased public spending.