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Corporate results: Fauji Cement’s earnings grow 36%

February 18, 2014

Fauji Cement Company Limited (FCCL) has recorded after-tax profit of Rs1.25 billion in the first half of fiscal year 2013-14, up 36% compared to Rs923 million in the corresponding period of previous year.

Earnings per share (EPS) stood at Rs0.94 compared to Rs0.69 last year. The company announced an interim cash dividend of Rs0.75 per share.

In a report, JS Research commented that FCCL’s earnings were in line with its estimate and an improvement in gross margin was largely the result of higher cement prices.

Lower operating expenses, which were down 7% year-on-year, and a 19% decline in financial charges also boosted earnings in the July-December period, it said.

On quarterly basis, the company’s earnings grew 19% to Rs669 million in the October-December quarter, primarily on the back of lower financial charges.

Commenting on the dividend announcement, Global Research said the payout of Rs0.75 per share was higher than its estimate of Rs0.50.

Revenues of the company rose 9% to Rs8.23 billion in the first half despite a 7% decline in cement off-take to 1.16 million tons.

The revenues grew in the wake of a 13% increase in domestic cement prices to Rs500 per 50kg bag and around 10% depreciation of the rupee during the period, which boosted the value of exports in rupee terms.

Margins improved by 1.5 percentage points to 34% in the six-month period following a 13% increase in local retention prices to Rs7,300 per ton. However, the potential of a further increase in margin was constrained by inflationary pressures, such as rising energy tariffs, and increase in fuel and transportation charges.

Financial charges dropped 19% to Rs665 million because of a 15% reduction in outstanding debt to Rs10.4 billion.

Moreover, the company used financial derivatives to avoid potential exchange losses of Rs350 million in the first quarter that contributed to the decline in financial charges.

Published in The Express Tribune, February 19th, 2014.

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Source: Express Tribune (Pakistan)

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