Fauji Cement Company Limited (FCCL) showed respectable growth in profitability as company posted earning of Rs 1,668 million (EPS: Rs 1.25) in 1HFY15 compared to Rs 1,251 million (EPS: Rs 0.94) in 1HFY14, depicting surge by 33%. This is mainly due to higher retention prices, better volumes, hike in other income and reduction in financing cost. In 2QFY15, company recorded PAT of Rs 1,066 million (EPS: Rs 0.80) against Rs 669 million (EPS: Rs 0.50) in 2QFY14, up by 59% YoY. This is due to higher cement prices by 5% and 9% surge in volumetric sales. Furthermore, company announce cash dividend of Rs 1/share.
Higher cement prices drives revenue
Net sales of the company hike by 9% to Rs 8.99 billion in 1HFY15 against Rs 8.23 billion owing to the higher cement price which increase by 7%. Volumetric sales up by 6% to 1.25 million tons versus 1.18 million tons in 1HFY14 mainly due to higher local sales. Domestic sales increased by 8% to 1,023k tons versus 948k tons in 1HFY14. However, exports sales fall by 3% to 229k tons in 1HFY15 owing to reduction of sale in Afghanistan.
Higher retention prices drive gross profit
Company posted 14% growth in gross profit as it hike at Rs 3.16 billion versus Rs 2.77 million in 1HFY14 mainly due to higher retention prices. Cost of good sold rise by 7% to Rs 5.82 billion against Rs 5.46 billion in 1HFY14. Gross margin increased to 35.2% from 33.7% in 1HFY14. Similarly, retention prices increase by 3% to Rs 7,181/ton from Rs 6,945/ton in 1HFY14.

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FCCL – Earnings growth remains strong