FCCL - 3QFY23 Result Review, (AKD Off the Analyst's Desk Apr 19, 2023)
Fauji Cement Company Limited (FCCL) announced its 3QFY23 result today, where the company posted earnings of PkR1.9bn (EPS: PkR0.8) compared to PAT of PkR2.8bn (EPS: PkR1.1), a decline of 32%QoQ. The decline in earnings is primarily due to lower gross margins and a significant increase of 2.3x in finance cost compared to the previous quarter.
- Topline of the company clocked in at PkR18.2bn vs. PkR19.0bn in the previous quarter, a quarterly decline of 3.9%. Decline in the topline is possibly due to a drop in the retention price as offtakes remain flat QoQ.
- Gross margins witnessed a decline of ~110bps to settle at 25.9% vs. 27.0% in the previous quarter. Where we believe, i) an increase in weighted average coal price (possibly due to the low percentage of local coal in the new Nizampur line), and ii) rise in the power cost amid increased grid percentage in the power mix during the period negatively impacted the margins.
- Other income was reported at PkR284mn against PkR137mn in previous quarter, up by 107%QoQ.
- Furthermore, Finance cost increased by 2.3x/5.3x QoQ/YoY to clock in at PkR1.6bn, compared to PkR0.5bn and PkR0.3bn in 2QFY23/3QFY22, respectively. The said increase in the financial charges is attributable to an increase in the borrowing owing to the ongoing capacity expansion at D.G Khan, and increase in the benchmark rate during the quarter.
- Overall, 9MFY23 earnings cumulates to PkR7.0bn (EPS: PkR2.8), an increase of 30%YoY compared to NPAT of PkR5.3bn (EPS: PkR2.2) in SPLY. The increase in the nine-month period is majorly attributable to increased retention prices and a slight improvement in gross margins, despite the decline in cement offtakes.
AKD Securities Ltd. is one of the leading securities firm in Pakistan, providing a comprehensive range of investor focused services, including equity brokerage, economic and securities research, investment banking and financial advisory services. AKD Securities accounts for more than 6% of the average daily value of the Karachi Stock Exchange. AKD Securities was the first brokerage house to launch an online trading platform in Pakistan in November 2002 and now has the largest market share with over 6000 customers. This has helped diversify and expand the retail investor base in the country and ushered in a whole new universe of investors to the stock market.
AKD Securities Ltd. caters to a diversified group of domestic and international institutional investors, high net worth individuals and upscale retail clients, including expatriate Pakistanis. With high quality research, unparalleled execution and distribution capability for both regular and large block trades, AKD Securities Ltd. has earned an outstanding reputation in the Pakistani securities industry.Outside of commercial banks, AKD Securities Ltd. is one of the biggest capital market firms in the country. AKD Securities is the leader in raising and providing risk capital in underwriting, market making and mergers and acquisitions in Pakistan. Good corporate governance and professionalism are emphasized throughout the firm and AKD Securities Ltd. is amongst the very few companies to have introduced a firm-wide comprehensive CODE of ETHICS, overseen by an independent compliance manager.Ultimately, our success is based on the quality of service we provide to our customers and the trust and confidence reposed in us by them. Our focus, therefore, remains on customer satisfaction at all levels in the company.
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