Fauji Cement post EPS Rs0.28; -71pc YoY in 4QFY19

Karachi, August  27, 2019: Fauji Cement Company Limited reported 4QFY19 EPS of Rs0.28, in-line with our estimates of  Rs0.28. Cumulatively the company’s EPS for the year of FY19 declined by 17 percent YoY to Rs2.05. Along with the results the company announced a cash dividend of Rs0.75/share taking total DPS to Rs1.5. 

Revenue of the company remained flat; down by 1 percent YoY primarily due to flat cement sales and retention prices. During the outgoing quarter, FCCL sold 0.84 million tons of total dispatches with local & export share of 94/6 percent.

The company along with the sector lost its pricing power amidst capacity expansions by peers which resulted in attrition in gross margins by 3 points YoY to 23 percent in 4QFY19.

Surprisingly, distribution and admin cost declined by 25 percent to Rs148 million as compared to Rs197 million in the same period last year. We await detailed accounts for the clarity.

Effective tax rate of the company clocked in at 60 percent vs. tax reversal of 17 percent in the same period. The significant tax rate was primarily due to super tax.  

We flag, price competition, higher than expected coal prices, and lower than estimated local demand, as key risk for FCCL.