Fecto Cement reports 37% revenue growth
Fecto Cement’s net sales revenue in the 2022 financial year came in at PKR6775m (US$30.8m), compared to PKR4961m in the previous year, marking a YoY increase of 36.56 per cent. Over the same period, net local sales revenue advanced to PKR6602m, versus PKR4653m, representing YoY growth of 41.89 per cent, against an increase in gross sales revenue of 33.5 per cent and local sales volume growth of 1.44 per cent.
According to the company, this growth was achieved through improved retention prices. Although prices in the local market remained depressed throughout the 2021 financial year, improved pricing was seen during the year under review due to the substantial increase in cost of production, particularly coal, electricity and diesel. Export sales revenue fell by 44.29 per cent YoY, against a 51.46 per cent reduction in volumes.
The company saw its production decline in the 2022 financial year with cement production contracting by 1.85 per cent YoY to 712,757t, while clinker production fell by 15.76 per cent YoY to 618,559t. This was attributed to subdued demand due to market conditions, according to the company. Local dispatches improved by 1.44 per cent YoY in the 2022 financial year to 686,077t, compared to 676,337t a year earlier, while exports declined by 51.46 per cent from 54,732t in the 2021 financial year to 26,567t a year later. The decline in exports was the result of “disturbance at Pak Afghan border coupled with lesser demand fromAfghanistan”, said the company in its 2022 Annual Report.
Cost of sales during the year under review increased by 26.25 per cent YoY though the overall sales volume reduced by 2.52 per cent. Cost of sales increased by PKR1887/t (US$8.59/t) compared to last year mainly on account of higher coal and electricity prices. The last financial year has seen Fecto Cement install a 5MW solar power plant in a bid to reduce electricity costs and its dependence on fossil fuels. The company achieved gross profit of PKR874m for the year under review, versus PKR287m in the previous year. Profit before taxation came in at PKR429m in 2022, against a loss before taxation of PKR63m last year.
Looking ahead, the company expects this year to remain challenging not only for the industry but for the overall economy of Pakistan due to high inflation, rising interest rates, commodity super cycle, continuous depreciation of PKR against US$, and the uncertain political situation in the country. Recent flooding in the country has further aggravated the economic situation, while disruption and delay in the implementation of the International Monetary Fund (IMF) programme has also fuelled the already fragile economic conditions in Pakistan. Exports to Afghanistan may be affected due to the geopolitical situation in the region.
