Fecto Cement : Transmission of Quarterly Report the Peroid Ended Sepetmber 2022.

Interim Report September 30, 2022

F E C T O C E M E N T L I M I T E D 1

Interim Report September 30, 2022

COMPANY INFORMATION

• F E C T O C E M E N T L I M I T E D

Interim Report September 30, 2022

DIRECTORS' REVIEW

Your directors are pleased to present before you their report together with the un-audited financial results of the company for the Three Months period ended September 30, 2022.

INDUSTRY OVERVIEW

During the period under review overall sales volume of the industry reduced by 25.11% with total sales volume of 9.61 million tons as against 12.83 million tons of same period last year. Local sales volume of the industry reduced by 23.76% with dispatches of 8.60 million tons as against 11.28 million tons of same period last year, whereas exports reduced by 34.84% with sales volume of 1.01 million tons as against 1.55 million tons of same period last year. Overall sales volume of plants located in north part of the country reduced by 23.54% out of which local sales volume reduced by 23.46% whereas exports reduced by 25.53%.

OPERATING PERFORMANCE

Clinker production for the period reached to 140,401 tons as against 175,045 tons of same period last year, thus reduced by 19.80%. During the period the Company produced 136,383 tons of cement as against 178,200 tons of same period last year. Accordingly cement production reduced by 23.47% during the period under review.

Overall sales volume of the Company reduced by 23.80% during the period under review, out of which local sales volume reduced by 27.98% whereas exports increased by 95.23%. Local volume reduced mainly on account of extraordinary rains causing floods in many parts of the country, which seriously hampered construction activities. Coupled with this, political uncertainty and high inflation also affected off take of cement in the country. Exports to Afghanistan improved during the period which remained depressed during last year due to disturbance in Afghanistan.

FINANCIAL RESULTS

SALES REVENUE

During the period under review, gross local sales revenue increased to Rs. 2,193 million as against Rs. 1,992 million of same period last year, increasing by 10.09 % whereas Net local sales revenue increased by 17.85% and reached to Rs. 1,644 million as against Rs. 1,395 million of same period last year though locals sales volume reduced by 27.98%.

Exports sales on the other hand increased to Rs. 127 million as against Rs. 33 million of same period last year registering growth of 284.85% as against increase in volume by 95.33%. Main reason for such increase was improved prices in USD and depreciation of PKR against USD which resulted higher retention price for exports.

PROFITABILITY

Cost of sales during the period under review, increased by 40.12% as against decrease in sales volume by 23.80%. Out of 40.12% increase in total cost of sales, fuel and power cost increased by 62.25%. Increase in fuel and power cost was on account of higher coal prices in international

F E C T O C E M E N T L I M I T E D 3

Interim Report September 30, 2022

market coupled with depreciation of PKR against USD. Increase in power cost was due to increase in base electricity tariff by power distribution companies and imposition of higher fuel price adjustment charges on account of generation of electricity on expensive fuels.

High cost of fuel and power negated the impact of better retention prices; hence Company was able to achieve gross profit of Rs. 90 million as against Rs. 223 million of same period last year.

Finance cost increased due to higher utilization of financing facilities and long term loans for capital projects. The Company suffered loss before tax of Rs. 51 million and loss after tax of Rs. 61 million respectively for the period as against profit before tax of Rs. 105 million and profit after tax of Rs. 127million of same period last year. Loss per share for the period was of Rs. 1.21 per share as against earnings per share of Rs. 2.53 of same period last year.

FUTURE OUTLOOK

Demand of cement in local market remained subdued during first quarter due to reasons explained above. Political uncertainty, high interest rate, high inflation and increasing fuel and utility prices have shrunk the dispensable income of masses, hence affecting overall construction activities. These factors may affect overall demand in the country; however, some improvement in off take may arise due to post flood construction activities. Exports to Afghanistan have improved during the period and we foresee this trend to continue. Prices of coal have seen some downward trends and any further reduction in prices will help reduction in its cost. Electricity rates are however, on constant rise putting pressure on overall cost of production. Installation of Solar power plant has made it possible for the Company to have some respite, further completion of capital projects will also help Company achieving fuel and power efficiency.

ACKNOWLEDGEMENT

The Board would like to place on record their appreciation to all employees of the Company for their dedicated work and for dealers for their continued support. We are also thankful to the lenders for their co operation and regulators for their guidance.

On behalf of the Board

• F E C T O C E M E N T L I M I T E D