Earnings Report /

Fauji Cement: 4QFY22 Review – Askari Cement amalgamation led to earnings beat

  • FCCL has posted EPS of PKR1.40 for FY22, reporting amalgamated accounts upon acquisition of Askari Cement

  • Revenue has increased to PKR31.3bn. Where we estimate that FCCL has booked Askari Cement full year sales of PKR21.7bn

  • FCCL has booked effective tax rate of 47% in 4QFY22 vs 27% same period last year; due to one-off super tax implications

Intermarket Securities
21 September 2022

Fauji Cement Company Ltd (FCCL) has posted NPAT of PKR3.1bn for 4QFY22 (EPS: PKR1.40), up 249% YoY and 147% QoQ, reporting amalgamated accounts upon acquisition of Askari Cement. This takes FY22 net profit to PKR7.1bn (EPS: PKR3.26), up 105% YoY. The company also announced a share payout of 12.5%.

Key observations

  • Net sales have increased 153% YoY, to PKR31.3bn as compared to our estimated revenue of PKR9.5bn. We estimate that the company has booked Askari Cement full-year sales of PKR21.7bn.

  • Gross margins have clocked in at 25.5%, up 7.9ppt YoY and 0.1ppt QoQ, The YoY increase in margins is due to more than adequate increase in cement prices to pass on cost pressures and higher efficiencies of Askari Cement as well.

  • Finance cost has increased to PKR773bn up 11% YoY. The increase is majorly due to higher borrowings of Askari Cement, coupled with the increase in interest rates.

  • Among other line items: (i) FCCL has booked an effective tax rate of 47% in 4QFY22 vs 27% same period last year, this is due to one-off super tax implications, and (ii) admin expenses have increased to PKR786mn, up 4.4x YoY.

FCCL, post amalgamation of Askari Cement has registered decent full-year earnings and going forward we believe that higher synergies, coupled with early expansion of Askari Cement will not only increase the market share, but also elevate overall profitability of the company. We presently have a Buy stance on the scrip with a TP of PKR21/sh. However, we look to revise our Target Price, post detailed financials, including the recent acquisition of Askari Cement and its new expansion.