Karachi, Lucky Cement Limited (LUCK) announced its second-quarter results for the fiscal year 2024 today, revealing a robust performance with unconsolidated earnings of PkR 6.8 billion, slightly down from the previous quarter but surpassing market expectations.

According to AKD Securities Limited, the company's earnings exceeded forecasts primarily due to higher-than-expected gross margins and a significant dividend from Lucky Motors Corporation (LMC). The consolidated earnings, which include non-core operations, amounted to PkR 60.2 per share, compared to PkR 35.7 per share in the same quarter last year.

LUCK's topline increased by 4% quarter-over-quarter to PkR 30.5 billion, despite a 2% decline in offtakes, thanks to a roughly 4% increase in retention prices. Notably, gross margins remained strong at 36.0%, attributed to efficient coal procurement at favorable rates. This is slightly lower than the 36.9% gross margin in the first quarter of FY24, which the management had described as a one-off event due to advantageous coal inventory procurement.

Other income also exceeded expectations, primarily due to an unexpected PkR 1.4 billion dividend from LMC, totaling PkR 3.0 billion for the quarter. The company's half-year consolidated earnings showed a 92% year-on-year increase, reaching PkR 46.8 per share, driven by these elevated gross margins and a significant rise in other income.

On a consolidated basis, earnings for 2QFY24 reached PkR 60.2 per share, marking a 69% year-on-year increase. This growth was largely driven by a high contribution from Lucky Electric Power Company Limited (LEPCL), which maintained a 100% availability factor in the first half of FY24, and strong performance in foreign cement operations, particularly in Iraq, amid increasing demand and full capacity utilization.

This financial update from Lucky Cement highlights the company's strong performance in a challenging economic environment, bolstered by strategic operations and robust demand in key markets.

Karachi, Fauji Fertilizer Company Limited (FFC) today announced its financial results for the fourth quarter of the calendar year 2023, revealing a decrease in unconsolidated earnings compared to the previous quarter.

According to AKD Securities Limited, FFC's earnings in 4QCY23 were PkR 7.5 billion (EPS: PkR 5.9), marking an 18% quarter-over-quarter decline from PkR 9.1 billion (EPS: PkR 7.2) in the preceding quarter. This decrease in earnings is primarily attributed to an increased loss allowance on subsidy receivables from the Government of Pakistan (GoP) and higher-than-expected taxation, with an effective tax rate of 47%.

The company's topline stood at PkR 43.4 billion, a 2% decrease quarter-over-quarter, largely due to a 10% decline in urea volumes, which totaled 594k tons compared to 664k tons in 3QCY23. However, an 11% quarter-over-quarter increase in retail prices largely offset the impact of this volume decline.

Distribution expenses saw a significant surge of 32% quarter-over-quarter, reaching PkR 4.0 billion, potentially due to increased transportation costs following axle load implementation. Other income also experienced a decline, falling by 27% quarter-over-quarter to PkR 4.6 billion, mainly due to the absence of dividends from power subsidiaries.

A notable deviation from expectations was a higher loss allowance on GoP subsidy receivables, which amounted to PkR 2.3 billion, compared to PkR 0.1 billion in the previous quarter and PkR 0.7 billion in CY22. Additionally, the high taxation of PkR 4.7 billion remained a significant factor in the quarter's financial performance, with further clarification on this aspect awaited.

Despite these challenges, FFC's earnings for CY23 accumulated to PkR 23.3 per share, up 48% year-over-year, driven mainly by elevated gross margins amidst increased retail prices. The company also announced a year-end cash dividend of PkR 4.1 per share, taking the full-year dividend to PkR 15.5 per share, representing a payout of 66% for CY23.

FFC's latest financial results reflect the impact of external factors such as government policies and market conditions on its profitability.