Fauji 1Q boosted by higher sales and prices

Pakistan-based producer Fauji Cement reported a 61 per cent rise in profit after tax for the first quarter of the current Pakistan fiscal year to PKR582m (US$5.4m), as higher volumes and prices boost sales.

According to analysts at Summit Capital, the company performed well due to sharp increase in its top line which was up by 12 per cent YoY and improved gross margins due to higher cement prices and lower coal expenses.  Higher prices and increased sales volumes were the core factors behind the rise in profitability, the brokerage house noted.

The company also benefitted from a sharp decline in its financial charges and higher other income. Moreover, the company paid corporate tax at an effective rate of 30 per cent compared to a tax payment at an effective tax rate of 31 per cent in the first quarter of the previous fiscal.

Fauji Cement has a domestic market share of 6.75 per cent. Pakistan cement demand is expected to continue to perform well on the back of higher prices, a higher allocation of funds to the Public Sector Development Program (PSDP) and ongoing work on mega projects, Summit Capital noted.

On cement export front, the report said, the recommencement of construction activities in Gulf countries along with the other economies that are exiting recession gradually will help lift Pakistan’s exports going forward.