· Fauji Cement Company Limited (FCCL) announced result for 1QFY22 where EPS clocked in at PkR0.98, up 95/79% YoY/QoQ. The result was above our expectation mainly on account of higher than expected topline where we believe higher than expected dispatches played a part.

· Topline clocked in at PkR6.9bn, up 26/3%YoY/QoQ where the significant increase on YoY basis was largely a result of increase in dispatches while flattish performance on QoQ basis despite decline in dispatches is a consequence of increase in cement prices.

· Gross margins clocked in at 30% against our expectation of 19% mainly due to higher than expected dispatches leading to better utilization, in our opinion. On YoY basis, margins improved by 9bps while on QoQ basis, an improvement of 7bps was witnessed.

· Distribution expenses of the company increased by 6/6% YoY/QoQ while administrative expenses increased by 45%YoY however declining by 3% on QoQ basis.

· Along with the result, company also announced that board has considered amalgamation with Askari Cement Limited (ACL) and has requested for finalization of the relevant documentation, including but not limited to the scheme of arrangement and share swap ratio.

AKD Research