Fauji Cement Company Limited (FCCL) announced its 4QFY23 result today, where the company posted earnings of PkR470mn (EPS: PkR0.2) compared to PAT of PkR1.9bn (EPS: PkR0.8), a decline of 75%QoQ. The decline in earnings is primarily due to a notable high effective taxation charge during the quarter.

· Topline of the company clocked in at PkR16.2bn vs. PkR18.2bn in the precious quarter, a quarterly decline of 11%. This decline is majorly attributable to substantial 17% drop in sales volumes, which clocked in at 1.12mn tons vs 1.34mn tons in the previous quarter.

· Gross margins witnessed a remarkable quarterly improvement of 13.4 percentage points, reaching 39.3% during the quarter. This improvement is possibly due better inventory management.

· Other income is reported at PkR343mn against PkR284mn in previous quarter, up by 21%QoQ, driven by an increase in finance income amid interest rate hike.

· Finance cost clocked in at PkR1.1bn compared to PkR1.6bn in the previous quarter, a decline of 30%QoQ while remaining flat annually. The said quarterly decline is due to previous quarter’s high financial charges, partly due to exchange loss.

· Furthermore, effective taxation clocked in at PkR2.5bn, an ETR of 84% vs. 30% in the previous quarter, due to retrospective implementation of super tax on previous PBT and deferred tax.

· Overall, FY23 earnings cumulates to PkR3.03/sh vs PkR2.9/sh SPLY, an increase of 5%YoY. The increase in the annual numbers is largely attributable to enhanced gross margins resulting from higher cement prices and declining coal prices.

Courtesy- AKD Research