Fauji Cement exports to Afghanistan likely to increase in FY25

The management of Fauji Cement Co Ltd (FCCL) held an analyst briefing session on 9th October 2024 to discuss the company’s performance and future outlook. FCCL reported strong results for FY24, driven by significant cement and solar expansion investments. The company posted earnings of PKR8223m (US$29.6m) compared to PKR7440m in the previous period, a jump of 11 per cent YoY.

In FY24, volumetric dispatches rose by five per cent, recording 5.08Mt, with local dispatches up by three per cent, arriving at 4.56Mt. The company exported about 500,000t to Afghanistan, expecting 10-15 per cent growth in FY25. The company hopes the plant at the DG Khan site's favourable proximity to seaports, compared to other northern plants, enhances its potential for future sea export opportunities.

FCCL, during this financial period, also positively experienced the opening of the Nizampur greenfield project, which increased the company's market share.

Management indicated that they do not anticipate a significant increase in local demand for FY25. However, they noted the possibility of a demand uptick in 4QFY25 due to the lagged effects of recent rate cuts impacting construction demand.

The company currently has 52.5MW of installed solar capacity, with an additional 15MW planned for FY25 at an estimated cost of PKR1.5bn. Management aims to generate 60 per cent of its energy from captive sources and has space to expand solar power as utilisation levels increase.

Management plans to acquire a polypropylene plant for PKR1bn. The plant is expected to meet 90 per cent of the company's polypropylene bag requirements and has a payback period of 4-5 years.