Fauji Cement Co earns its highest-ever profit in FY24

Fauji Cement Co Ltd posted its financial results for 4QFY24 and FY24 on the Pakistan Stock Exchange’s website on 27 August 2024. The company earned a profit after tax of PKR8.2bn (US$29.44m) (FY23 - PKR7.4bn), the highest ever in its history. Top officials attribute that this is despite an additional charge of deferred tax amounting to PKR1.8bn on account of the latest amendment made in tax laws, where income tax on exports has been changed from presumptive tax (deducted at the time of export realisation) to normal tax.

According to the company’s announcement, its dispatches during FY 24 were recorded at 5.1Mt compared to 4.8Mt in the same period last year (SPLY), an increase of 10 per cent (YoY). During FY 24, the company earned a net revenue of PKR80.02bn compared to PKR68.06bn during the same period last year, an increase of 18 per cent (YoY). The gross profit margin increased to 32 per cent compared to 30 per cent in SPLY.  

This is mainly attributable to better sale prices in the local market, higher export volumes, and cost optimisation initiatives the Management took. Increased usage of local coal, use of multiple types of alternative fuels, increase in own power generation to mitigate the 35 per cent increase in power tariffs, and optimisation of fixed costs contributed towards achieving the overall results.

According to IMS Research, FCCL has posted strong results, which have been dampened by excessive taxation. However, it remains to be seen whether the company will maintain current margins, considering the increase in Federal Excise Duty (FED) by PKR100/bag in FY25 and the increase in raw material royalty announced by the Punjab government.