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All major cement manufacturers that have revealed their financial results for the outgoing period so far have exhibited growth in their respective top lines and Fauji Cement is no exception to the norm. The company unveiled a sizeable jump of 9.2 percent in sales during 1HFY15.
However, where the company appears poised better than competitors is in its ability to translate better sales volume, into better profitability.
The story starts from cost of goods sold, which was trimmed as a percentage of the top line, thus pushing up gross margin by 400 bps in the period under review.
"Lower furnace oil prices have allowed the company to use its captive power plant instead of relying on the national grid, thus curtailing production costs" explained Umair Vayani, research analyst at JS Global.
Distribution costs, administrative expenses and other operating expenses all rose as a proportion of the top line during this time.
However, the company's finance costs sliced considerably, thus enabling a beefed up profit after taxation.
"During the period, the company's plant utilization averaged about 77 percent" said Vayani.
That tally is expected to jump considerably in coming months, meaning even stronger performance by the company in the foreseeable future.


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FAUJI CEMENT
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Rs (mn) 1HFY14 1HFY15 chg
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Sales 8237 8991 9.2%
Cost of goods sold 5460 5823 6.7%
Gross profit 2777 3168 14.1%
Gross margin 34% 35%
Distribution cost 55 76 39.3%
Administrative expenses 103 130 26.8%
Other operating expenses 140 182 30.2%
Finance cost 665 402 -39.5%
PAT 1251 1668 33.3%
Net margin 15% 19%
EPS (Rs) 0.94 1.25 33.0%
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Source: KSE notice
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