Islamabad: Fauji Cement Company Limited (FCCL) reported a 2% increase in earnings for the first quarter of fiscal year 2026, but the results fell short of expectations due to declining gross margins. The company announced earnings of Rs3.29 billion, translating to an earnings per share (EPS) of Rs1.34, compared to the same period last year.

The company's gross margins decreased to 32% in the first quarter, down from 34% last year and 39% in the previous quarter. Analysts had anticipated margins around 37%. This reduction is attributed to lower retail cement prices and changes in the power mix during the quarter.

Despite the earnings increase, FCCL did not declare any cash dividend for the quarter, aligning with market expectations. The rise in earnings was supported by a 2% increase in net revenue and a significant reduction in finance costs.

Net revenue for the quarter reached Rs23.42 billion, marking a 2% year-on-year and 7% quarter-on-quarter increase. The revenue boost was driven by higher domestic and export dispatches, with domestic dispatches rising by 6% year-on-year and export dispatches surging by 62%.

Finance costs plummeted by 51% year-on-year to Rs668 million, a result of lower interest rates due to monetary policy easing. The effective tax rate stood at 38%, consistent with previous periods.

Currently, FCCL is trading at a price-to-earnings ratio of 7.3x for FY26E and 6.1x for FY27F, with a dividend yield of 4.1% and 5.0%, respectively.