Islamabad, Following a significant expansion in the second quarter of the fiscal year 2024, Fauji Cement Company Limited (FCCL) has solidified its position as the third largest cement manufacturer in Pakistan in terms of capacity. This achievement comes as the company increased its annual production capacity from 3.6 million tons to 10.6 million tons through strategic mergers and capacity expansions at its Nizampur and DG Khan facilities. This expansion not only enhances FCCL's footprint in the industry but also marks a significant move towards penetrating the Southern market, including South Punjab, Balochistan, and Sindh.
According to JS Global, FCCL's growth strategy has been accompanied by a continuous focus on cost optimization. The company has improved its operational efficiency by shifting its fuel and power mix towards more cost-effective sources, including Local and Afghan coal, and increasing its reliance on self-generated power to 60%. The introduction of an 11MW solar plant in Nizampur and the addition of Waste Heat Recovery (WHR) plants have further augmented FCCL's green energy capacity to 40MW, significantly reducing its power costs.
Despite the substantial increase in debt, which rose almost 60% following the expansions since FY22, FCCL is now focusing on debt reduction. With 44% of its loans being concessionary, the company anticipates a reduction in finance costs, which is expected to bolster its financial health in the coming quarters. The financial results for 2QFY24 showed a profitability of Rs2.7 billion, translating into earnings per share (EPS) of Rs1.1, a 2% quarter-over-quarter increase. However, no dividends were announced, reflecting the company's commitment to its capital expenditure obligations.
The strategic initiatives undertaken by FCCL not only signify its growth ambition in the highly competitive cement industry but also its dedication to sustainable practices and financial prudence. As the company navigates through its growth trajectory, its focus on reducing reliance on the national grid and enhancing cost efficiencies through green initiatives positions it well for future profitability and market leadership.
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