FCCL_2QFY24 Result Review — Steady earnings amid margin expansion, (AKD Off the Analyst's Desk Feb 26, 2024)
FCCL_2QFY24 Result Review — Steady earnings amid margin expansion
Fauji Cement Company Limited (FCCL) announced its 2QFY24 result today, where the company posted earnings of PkR2.7bn (EPS: PkR1.08) compared to PAT of PkR2.6bn (EPS: PkR1.07) during previous quarter, an increase of 2%QoQ. The growth in quarterly earnings is attributed to the expansion of gross margins and a decrease in finance costs. FCCL's earnings marginally exceeded our expectations of PkR0.99/sh.
- Topline clocked in at PkR20.0bn vs. PkR20.3bn in the previous quarter (↓1.4%QoQ), primarily due to 7% quarterly decline in offtakes (1.25mn tons vs. 1.34mn tons in 1QFY24), which offset the impact of 5% increase in retention prices.
- Gross margins settled at 32.6% vs 31.1%/27.0% in 1QFY24/SPLY. The expansion in quarterly gross margins is likely attributed to increased retention prices and a decline in coal prices.
- Operating expanses increased by 24%QoQ to PkR1.3bn, possibly due to increased transportation costs amidst axel load implementation.
- Finance costs clocked in at PkR1.0bn vs. PkR1.1bn in the previous quarter, down 11%QoQ, amid decline in ST-borrowings. To recall, FCCL's short-term borrowing fell to PkR1.7bn as of end-Sept'23 from PkR4.5bn in Jun'23 accounts.
- Overall, this takes 1HFY24 earnings to PkR2.15/sh against PkR2.07/sh in SPLY, with the increase largely attributable to the expansion of gross margins amid higher retention prices.
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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