PACRA Maintains Entity Ratings of Fauji Cement Company Limited

The assigned ratings of Fauji Cement Company Limited ("FCCL" or "the Company") depict the strength of Company’s overall performance. FCCL has achieved the third spot in the local cement industry in terms of installed capacity and market share. In FY24, the cement industry saw a 1.6% rise in total dispatches to 45.3 MT, driven by a 55% surge in exports amid favorable international prices and rupee devaluation. However, domestic dispatches declined by 4.6% due to sluggish construction activity. In 1HFY25, total dispatches fell by ~4% to 22.93 MT, with local sales dropping 10.5%, while exports grew by ~31% to sustain capacity utilization. Aligning with industry trends, the Company’s total dispatches in FY24 rose to 5.1 MT from 4.8 MT in FY 23, with domestic sales increasing to 4.6 MT (FY23: 4.4MT) and exports to 0.5 MT (FY23: 0.4 MT). In 1HFY25, total dispatches stood at 2.81 MT, higher than the 2.58 MT recorded in SPLY. Local sales increased by 9% to 2.49 MT (1HFY24: 2.29 MT), Export dispatches saw a 10% improvement, reaching 0.32 MT (1HFY24: 0.29 MT). The Company’s net revenues grew to PKR 80,026mln in FY24 from PKR 68,069mln in FY23 and reached PKR 47,844mln in 1HFY25, up from PKR 40,352mln in 1HFY24. This growth was driven by a strategic shift to premium markets, helping improve profit margins. To optimize costs, the Company has implemented several efficiency measures, including increasing reliance on local coal over imported coal, expanding the use of alternative fuels, and transitioning to captive multi-fuel, including solar power generation, significantly reducing energy expenses. Additionally, to mitigate rising input costs—particularly in packaging— the Company-has acquired a PP Bags Manufacturing Plant. This strategic move enhances self-sufficiency and ensures in-house production of PP bags for cement packaging, further strengthening cost control and operational efficiency. These measures collectively contributed to maintain higher gross profit margins, which reached 35% in 1HFY25, compared to 32% in FY24 and 30% in FY23. Similarly, net profit margins continued to improve, standing at ~15% in 1HFY25, up from 10% in FY24, reflecting the success of these strategic and operational adjustments. Moreover, the Company has actively deleveraged its balance sheet, reducing financial stress. By December 2024, the leverage ratio declined to 30.6%, down from 32.7% in June 2024 and 37.8% in June 2023. The ongoing reduction in policy rates is expected to further improve financial flexibility and lower finance costs, reinforcing profitability.
The ratings reflect the Company’s strong financial position, with expected profitability growth driven by higher dispatch levels from the new Greenfield plant at D.G. Khan, enhancing access to the South market and supporting expansion. Liquidity remains solid, backed by substantial cash reserves and a stable cash cycle, while strong coverage metrics ensure comfortable debt servicing.

About the Entity
Fauji Cement Company Limited, a publicly listed company established in 1992, specializes in manufacturing, selling, and exporting cement products. Fauji Cement is majority owned by sponsor Fauji Foundation and other group companies (67%) while remaining shareholding comprises of general public (15%) and institutions (18%). The company is overseen by an eight-member board, including CEO - Mr. Qamar Haris Manzoor, a seasoned expert with over 30 years of experience in plant and project management, supported by a skilled team.