Karachi: FCL has announced a significant rise in its Net Profit After Tax (NPAT) for the fiscal year 2024, reaching PkR1.89 billion, which translates to earnings per share of PkR3.0, marking a 9% year-on-year increase. This improvement was primarily attributed to a 10% year-on-year increase in revenues and an enhancement in gross margins, which improved to 19% compared to 18% in the previous fiscal year.
According to AKD Securities Limited, in the first quarter of FY25, FCL's revenues climbed to PkR7.2 billion, a 6% increase from the same period last year. However, there was a decline in gross margins to 14.7%, down from 16.3% in the corresponding period last year, primarily due to increased competition and a shift towards low-margin product sales. The management is optimistic about exceeding the PkR36 billion in revenues reported in the previous fiscal year, with future growth contingent on commodity and currency price trends.
A sharp rise in other income, which soared to PkR253 million in the first quarter, was driven by finance income from cash invested using IPO proceeds and income from working capital loans extended to associate companies. Raw material costs, mainly copper and aluminum, constitute 65% of the total revenue, while energy costs represent 4%. In export markets, FCL stands out as the only domestic cable manufacturer certified by the British Approvals Service for Cables (BASEC).
The management anticipates substantial investments in distribution networks once the Distribution Companies (DISCOs) undergo privatization, drawing parallels to the privatization of K-Electric, one of FCL's largest revenue-generating customers. The company's current capacity utilization ranges between 73% and 75%, with a bottleneck at 80% of total capacity. FCL's BMR activity, detailed in the IPO plan, is proceeding as scheduled, with the completion of plant and machinery imports and building construction expected between June and September 2025.
The management stated that the dividend policy will remain consistent, prioritizing cash flow for future capital expenditure and repayment of short-term liabilities. With the anticipated growth of New Electric Vehicles (NEVs) and associated charging infrastructure, FCL expects increased demand for specialized cables and conductors in this emerging segment. The company is actively engaged in research and development with domestic auto manufacturers to address the current reliance on imported cables for this sector.
Declining interest rates and recovering economic activity are expected to drive demand for construction, further bolstered by government projects. Early indications of increased construction activity are already evident. Despite these developments, the company remains outside formal coverage.