IGI Securities Limited – Flash Note (October 24, 2022)

Karachi, October 24, 2022 (PPI-OT): Cements – Fauji Cement Company Limited

Earnings: Fauji Cement Company Limited (FCCL) announced its financial result for the first quarter FY23, whereby company reported earnings of PKR 2,315mn or PKR 1.06/share compared to last year PKR 2,104mn or PKR 0.97/share, up +10%y/y. On quarterly basis, company’s profitability is down by 24%, due to higher tax charge taken in previous quarter.

Payout: The Company did not announce any payout along with the result.

Operating performance: For the 1QFY23, Company’s sales recorded a +27%y/y growth to PKR 14.7bn backed by better retention prices which compensated industry wide slowdown in volumes and higher energy and coal prices. On sequential basis, sales are down by 53%q/q. Moreover, company’s gross margins clocked in at 29% slightly up when compared to previous quarter (4qFY23: 27%) and down when compared to last year same quarter (1QFY22: 30%). Interest costs during the quarter settled at PKR 414.6mn lower on sequential basis, whereas up by +89%y/y amid higher interest rates and increased financing. Effective tax rate for the period came at 30% (additional tax measures announced in budget 2023) compared to 47% in 4QFY23, and 24% during last year same period.