Fauji Cement Company Ltd. (FCCL) announced its 1QFY25 financial results, reporting its highest-ever quarterly earnings of PkR3.2bn (EPS: PkR1.3), compared to PkR2.6bn (EPS: PkR1.1) in SPLY. The 24%YoY earnings growth was driven by, 1) improved gross margins on account of higher prices and reduced power costs, and 2) elevated other income. The result was in line with our expectations:

• Revenue increased by 13%YoY to PkR23.0bn, driven primarily by 16%YoY rise in retention prices, despite a slight 1%YoY decline in offtakes to 1.33mn tons from 1.34mn tons in SPLY.
• Gross margins improved to 34.3%, up from 31.1% in SPLY, supported by higher retention prices and 20%YoY reduction in grid tariffs, given the company’s 48% reliance on the grid.
• Other income surged 3.1x YoY to PkR494mn, primarily due to a 3.6xYoY increase in cash and short-term investments.
• Finance cost rose by 48%YoY to PkR1.7bn, reflecting the inclusion of expansion-related financing costs.
• The effective tax rate (ETR) stood at 38%, up from 35% in SPLY. Notably, the tax in 4QFY24 was higher, with ETR of 74%, due to the additional deferred tax charge arising from changes in income tax treatment on exports, shifting from presumptive tax to normal tax.

Courtesy –   AKD Research