Fauji Cement Company Limited: performance and outlook

Fauji Cement Company Limited (PSX: FCCL) was incorporated in Pakistan as a public company in 1992 and commenced its operations in 1993. The company is engaged in the manufacturing and sale of different kinds of cement.

Pattern of Shareholding

As of June 30, 2025, FCCL has a total of 2452.847 million shares outstanding which are held by 18,704 shareholders.

Associated companies, undertakings & related parties which include Fauji Foundation (parent company), Committee of Admin Fauji Foundation, Fauji Fertilizer Company and Fauji Oil Terminal & Distribution collectively hold the majority stake of 66.81 percent in the company followed by local general public holding 12.93 percent shares of FCCL.

Joint stock companies account for 7.81 percent shares of the company while Modarabas & Mutual funds hold 4.16 percent shares. Around 3.14 percent of FCCL’s shares are held by foreign companies and 2.86 percent by Banks, DFIs and NBFIs. The remaining shares are held by other categories of shareholders.

Financial Performance (2021-26)

FCCL’s topline and bottomline which posted a decline in 2019 and 2020 took an upward flight thereafter. The bottomline also dropped in 2019 and 2020 with net loss recorded in the latter year.

However, since 2021, FCCL’s bottomline never looked back and attained new heights each year. In 2020, all the margins registered a drastic fall. This was followed by a sound recovery in all the margins in 2021.

In the subsequent years, gross and operating margins kept improving to attain their optimum level in 2025 followed by a downtick in 2026.

On the contrary, net margin followed a downward trajectory until 2024 followed by a reasonable growth in 2025 and 2026. The detailed performance review of the period under consideration is given below.

In 2021, FCCL’s topline ascended by 40.85 percent year-on-year to clock in at Rs.24,271.29 million. The company attained capacity utilization of 98 percent during the year owing to government’s affordable housing initiatives and increased infrastructure spending.

Cost cutting measures initiated during the year coupled with robust volumes and higher retention prices resulted in 834.27 percent higher gross profit in 2021 with GP margin climbing up to 25 percent from 3.77 percent in the previous year.

Administrative expense increased by 11.96 percent in 2021 due to increased payroll expense and cost charged by Fauji Foundation. Despite improved sales volume, FCCL was able to trim down its distribution expense by 7.25 percent in 2021 on account of lower salaries of sales force. 66557 percent higher other expense recorded in 2021 was on account of increased provisioning for WWF and WPPF.

Other income also increased by 126.13 percent in 2021 due to deferred grant and gain on disposal of property, plant & equipment. FCCL posted operating profit of Rs.5053.92 million in 2021, up 43185 percent year-on-year. OP margin also flew up to 20.82 percent in 2021 from 0.07 percent in 2020.

The company posted net finance income of Rs.50.92 million in 2021 versus net finance cost of Rs.184.94 million registered in 2020. This was due to the availability of improved cash flows which cut down FCCL’s borrowing requirements during the year.

Besides, dividends and bonus received on investments classified as FVTPL also contributed towards higher finance income in 2021. The company was able to post net profit of Rs.3471.35 million in 2021 as against net loss of Rs.59.38 million recorded in the previous year.

EPS stood at Rs.2.52 in 2021 versus loss per share of Rs. 0.04 recorded in 2020. NP margin clocked in at 14.30 percent in 2021.

FCCL recorded an astounding 123.49 percent year-on-year rise in its net sales which clocked in at Rs.54,243.12 million in 2022. This year marked the merger of Askari Cement Limited (ACL) into FCCL which increased its annual capacity to 6.36 million tons in 2022, up from 3.559 million tons until last year. The company operated at 88 percent capacity in 2022.

The company sold 5.6 million tons in 2022 compared to sales volume of 3.5 million in the previous year. Russia Ukraine crisis inflated global commodity prices in 2022. This coupled with Pak Rupee depreciation and elevated indigenous inflation pushed up cost of sales by 113 percent in 2022.

However, with better retention prices, the company was able to drive up its gross profit by 155 percent in 2022 with GP margin touching a new record height of 28.51 percent. During 2022, FCCL’s number of employees grew to 2226 from 1113 in the previous year on account of merger.

This resulted in doubling of payroll expense in 2022 which coupled with higher management consultancy fee, cost charged by Fauji foundation and merger expense resulted in 147.65 percent spike in administrative expense in 2022.

Distribution expense also escalated by 745.92 percent in 2022 on the back of higher payroll and amortization expense incurred during the year. Other expense hiked by 114 percent in 2022 due to higher profit related provisioning. Other income strengthened by 182.334 percent in 2022 primarily due to deferred grant.

All these factors translated into 137 percent improved operating profit in 2022 with OP margin rising up to 22 percent. FCCL recorded net finance cost of 455.76 million in 2022 as against net finance income of Rs.50.92 million reported in 2021. This was due to monetary tightening and increased borrowings in 2022. Net profit built up by 104.893 percent in 2022 to reach at Rs.7112.54 million with EPS of Rs.3.02 and NP margin of 13.11 percent.

FCCL recorded 25.49 percent improved topline to the tune of Rs.68.069.28 million in 2023. Decline in construction and infrastructure development activities due to overall slowdown of economy coupled with political upheaval took its toll on the sales volume of the entire industry.

FCCL recorded sales volume of 4.8 million tons in 2023, down 14.29 percent year-on-year.

Capacity utilization stood at 65 percent in 2023. The company increased its reliance on local coal and captive power generation to reduce cost. This coupled with the rationalization of fixed cost resulted in 32 percent improvement in gross profit in 2023 with GP margin reaching a new peak level of 30 percent.

Higher payroll, communication and other expenses were greatly offset by no management consultancy fee and no merger expense paid during the year. As a consequence, administrative expense inched up by only 6.325 percent in 2023. 68.73 percent higher distribution expense incurred during 2023 was the result of higher freight charges and amortization of brand acquired during merger with ACL.

Other expense dipped by 7.28 percent in 2023 was due to lower provisioning done for WWF and decline in special purpose audit charges. Other expense was partially offset by 89 percent higher other income recorded in 2023 on account of gain on disposal of fixed assets, deferred government grant and income from disposal of Foundation Solar Energy (Private) Limited, an associate company.

Operating profit strengthened by 33.68 percent in 2023 with OP margin rising up to 23.53 percent. Net finance cost escalated by 584 percent in 2023 due to higher discount rates, increased debt for expansion projects as well as exchange loss incurred during the year due to Pak Rupee depreciation.

Higher finance cost coupled with the imposition of additional 6 percent super tax diluted the bottomline growth to 4.6 percent in 2023. Net profit stood at Rs.7439.681 million in 2023 with EPS of Rs.3.16 and NP margin of 10.93 percent.

In 2024, FCCL registered 17.57 percent year-on-year improvement in its net sales which clocked in at Rs.80,026.23 million. This was primarily the effect of higher retention prices and increased exports to Afghanistan. FCCL’s dispatches clocked in at 5.1 million tons in 2024, up 6.2 percent year-on-year.

Revenue proceeds from local sales grew by 19 percent in 2024 mainly on account of higher retention prices while revenue proceeds from export sales grew by 25 percent in 2024 due to increased dispatches and Pak Rupee depreciation.

Due to increased utilization of local coal, the company hedged against exchange loss. Moreover, increased captive power generation also kept the company immune from 35 percent hike in energy tariffs. This resulted in 25.77 percent higher gross profit recorded by FCCL in 2024 with GP margin of 32 percent.

Administrative expense inched up by 9.73 percent in 2024 due to higher payroll expense which was the effect of inflationary pressure as well as workforce expansion from 2179 employees in 2023 to 2326 employees in 2024.

Distribution expense surged by 21.46 percent due to axle load requirement and increased export volumes which pushed up the freight charges. Other expense ticked up by 10.24 percent in 2024 due to higher provisioning done for WPPF. Other expense, to a great extent, was counterbalanced by 23.89 percent improved other income which was the consequence of higher deferred government grant recognized in 2024.

FCCL registered 28.56 percent higher operating profit in 2024 with OP margin of 25.73 percent. 67.98 percent higher net finance cost recorded in 2024 signified elevated discount rate and increased external borrowings. Net profit inched up by 10.53 percent year-on-year to clock in at Rs.8223.116 million in 2024. This translated into EPS of Rs.3.35 and NP margin of 10.28 percent in 2024.

In 2025, FCCL’s net sales mounted by 11.16 percent to clock in at Rs.88,956.33 million. The company recorded sales volume of 5.4 million tons in 2025, up 5.88 percent year-on-year. Besides an uptick in dispatches, higher retention prices and Pak Rupee depreciation also played a pivotal role in driving up FCCL’s topline in 2025.

During the year, the company acquired a Polypropylene bag manufacturing plant at Hattar, KPK, to reduce its packaging cost. In 2025, 90 percent of the company’s packaging requirements were met by this plant. In order to reduce the impact of massive hike in energy tariff, the company added another 15 MW of solar capacity which took its total renewable energy capacity to 67.5 MW in 2025.

Another important cost control measure implemented by the company during the year was the usage of 75 percent local coal. These cost optimization measures enabled the company to record 22.94 percent higher gross profit in 2025. GP margin also attained its optimum level of 35.50 percent in 2025.

Administrative expense surged by 11.40 percent in 2025 due to higher payroll expense. This was the effect of inflationary pressure as well as workforce expansion to 2335 employees in 2025.

Distribution expense ticked down by 10.68 percent in 2025 due to a drop in freight charges on account of stability in the global fuel prices. Other expense escalated by 78.90 percent in 2025 due to higher provisioning done for WWF and WPPF.

Other income strengthened by 40.79 percent in 2025 due to increased deferred government grant, gain on disposal of property, plant & equipment and gain on settlement of lease. FCCL recorded 27.37 percent higher operating profit in 2025 with OP margin clocking in at 29.50 percent.

Net finance cost tumbled by 10.19 percent in 2025 due to monetary easing and gain on re-measurement of investments classified as FVTPL. This was despite the fact that the company’s external borrowings increased during the year. Gearing ratio clocked in at 32 percent in 2025 versus gearing ratio of 34 percent recorded in 2024.

Downtick in gearing ratio in 2025 was due to higher equity on the back of robust accumulated profits. Net profit strengthened by 62 percent to clock in at Rs.13,326.202 million in 2025. This culminated into EPS of Rs.5.43 and NP margin of 14.98 percent in 2025.

Recent Performance (2026)

In 2026, FCCL’s net sales ticked up by 5.32 percent to clock in at Rs.93,690.18 million. This came on the back of an improvement in local dispatches and higher retention prices.

Robust volumes, increased capacity utilization leading to better absorption of fixed cost, diversification of energy mix and reduction in packaging cost due to acquisition of polypropylene bag manufacturing plant resulted in 3.64 percent uptick in gross profit in 2026.

However, GP margin ticked down to 34.92 percent in 2026 due to a spike in coal prices in the last quarter of the year which outpaced the increase in retention prices.

Administrative expense surged by 13.55 percent in 2026 due to enhancement of the company’s operations which would have required additional human resources, inflationary pressure as well as taller legal & professional charges due to the acquisition of 84.06 percent shares of Attock Cement Pakistan Limited in collaboration with Kot Addu Power Company Limited.

Distribution expense also surged by 10.35 percent in 2026 due to increased sales volume and higher petroleum prices in the aftermath of Middle Eastern crisis which inflated the transportation cost.

Higher provisioning done for WWF and WPPF appears to be the cause of 15.60 percent escalation in other expense in 2026.

Other income ticked up by 6.81 percent in 2026 likely due to investment and bank deposit income, gain on bargain purchase and exchange gain. Operating profit ticked up by 1.67 percent in 2026, however, OP margin tumbled to 28.46 percent.

Net finance cost plummeted by 49.36 percent in 2026 due to early loan payments which reduced FCCL’s overall outstanding debt.

FCCL also recorded share of profit of associate under equity method worth Rs.237.38 million in 2026. This resulted in net profit of Rs.16,182.912 million in 2026, up 21.44 percent year-on-year. This translated into EPS of Rs.6.60 and NP margin of 17.27 percent in 2026.

Future Outlook

Local dispatches are anticipated to grow on the back of higher expected PSDP allocation; implementation of CPEC related projects and favorable policy measures. Improved macroeconomic outlook will also bode well for the cement companies. Conversely, export performance is reliant on the border conditions with Afghanistan.

Higher oil and input prices in the aftermath of Middle East crisis have already impacted the company’s margins. If the company further embarks on its cost optimization initiatives such as improved localization, energy diversification etc, its margins and profitability are sure to pick up.

Furthermore, the acquisition of ACPL will greatly improve FCCL’s market share by providing it an access to the South Market where it had no presence before. This will enable the company to conquer sea exports.