August 29, 2023 (MLN): Fauji Cement Company Limited (PSX: FCCL) 's profitability rose by 4.60% YoY in FY23, clocking in its profit after tax at Rs7.44 billion [EPS: Rs3.16] compared to a profit of Rs7.11bn [EPS: Rs3.02] in the same period last year (SPLY).
Remarkably, despite facing a retrospective increase in the Super Tax rate from 4% to 10%, which had a notable impact of Rs1.98bn and led to an effective tax rate of 39%, the company managed to achieve this impressive profit figure.
Going by the results, the company's top line rose by 25.49% YoY to Rs68.07bn as compared to Rs54.24bn in SPLY.
Low GDP growth, high cost across the entire spectrum of construction materials, and a cut in the PSDP saw Cement dispatches decline by 15.7% year on year in FY23.
The cost of sales also rose by 22.88% YoY but was lesser than proportionate to sales increase, which improved the gross profit by 32.04% YoY to Rs20.42bn in FY23.
During the review period, other income inflated by 89.07% YoY to stand at Rs436.17 million in FY23 as compared to Rs230.7m in SPLY.
On the expense side, the company observed a rise in Selling and distribution expenses by 68.73% YoY and other expenses by 7.28% YoY to clock in at Rs2.71bn and Rs750.08m respectively during the review period.
The management continued its focus on implementing cost optimization initiatives including an increase in the use of local coal, higher usage of alternative fuel, and increasing captive solar generation capacity to 40MW which along with the Waste Heat Recovery power plant's fulfilling almost 60% of company's requirement during the day time operations.
All Cement Plants of FCCL now have solar captive power capacity. In addition, fixed cost rationalization has also contributed to the achievement of the above results.
The company’s finance costs grew by 6.84x YoY and stood at Rs3.12bn as compared to Rs455.76m in FY23, mainly due to higher interest rates.
On the tax front, the company paid a higher tax worth Rs5.46bn against the Rs4.42bn paid in the corresponding period of last year, depicting a rise of 23.66% YoY.
FY23 saw a massive devaluation as the Pak Rupee fell from Rs227 to Rs287 against USD, as a result, the company booked an exchange loss of Rs960m in finance cost that relates to the Expansion Project's financial liability, which is not allowed to be capitalized as per IFRS.
Expansion Projects
The Brownfield Expansion of 2.1m tons at Nizampur was successfully completed in a record time of 18 months and within the budgeted cost despite all the economic headwinds and logistic challenges due to Covid.
The Greenfield Expansion in D.G. Khan area is progressing as per schedule and is expected to come on line by end of the Q4 2023.
ESG Committee.
The Board has formulated an ESG Committee and approved its terms of reference.
The ESG initiative of the Company is in line with the best practices of protecting the environment, encouraging the green initiatives and giving back to the communities in which the Company operates along with ensuring Governance in all its business practices.
| Unconsolidated (un-audited) Financial Results for year ended 30 June, 2023 (Rupees in '000) | |||
|---|---|---|---|
| June 23 | June 22 | % Change | |
| Sales | 68,069,282 | 54,243,118 | 25.49% |
| Cost of sales | (47,650,809) | (38,779,542) | 22.88% |
| Gross Profit | 20,418,473 | 15,463,576 | 32.04% |
| Selling and distribution expenses | (2,705,263) | (1,603,323) | 68.73% |
| Administrative expenses | (1,381,633) | (1,299,439) | 6.33% |
| Other Income | 436,173 | 230,695 | 89.07% |
| Other expenses | (750,078) | (808,964) | -7.28% |
| Finance cost | (3,117,563) | (455,760) | 584.04% |
| Operating profit | 12,900,109 | 11,528,093 | 11.90% |
| Taxation | (5,460,428) | (4,415,553) | 23.66% |
| Net profit for the period | 7,439,681 | 7,112,540 | 4.60% |
| Basic earnings/ (loss) per share | 3.16 | 3.02 | – |
Amount in thousand except for EPS
Copyright Mettis Link News
Posted on:2023-08-29T15:01:19+05:00
40059
