Fauji Fertilizer Company (FFC) Limited, which is Pakistan’s largest urea manufacturing company, has announced its financial result for the half-year ending on June 30th, 2019.
FFC’s profits almost doubled to Rs. 8.60 billion for the half-year period, showing an impressive growth of 87.5% compared to Rs. 4.60 billion in the same period last year.
The fertilizer manufacturer posted 2nd quarter earnings of Rs. 5.2 billion compared to a profit of Rs. 2.4 Billion in the same period last year which is the highest for 2nd quarter profits in the last 5 Years.
The revenues for the half-year increased to Rs. 48.54 billion compared with Rs. 45.05 billion in the same period last year. The increase in earnings was likely due to increasing urea prices, higher dividend income, and higher DAP prices.
The cost of sales of the company decreased by 6.4% to Rs. 32.64 billion as compared with Rs. 34.88 billion in the same period last year which took the gross profit to Rs. 15.90 billion compared to Rs. 10.17 billion.
The administration and distribution expenses were down by 13% to Rs. 4.0 billion due to a decline in volumetric sales. FFC witnessed an increase in finance cost of 41% to Rs. 1.49 billion as compared with Rs. 1.06 for the previous year, owing to higher interest rates. Moreover, other expenses increased by 39.8% to Rs. 1.17 with other income down by 28.5% to Rs. 2.55 billion.
Share of profit for associates and the joint venture was down to just Rs. 8.70 million from Rs. 497 million compared with the previous year.
Earnings per share of the company increased to Rs. 2.91 as compared with Rs. 1.78. The Board of Directors also announced the first interim dividend of Rs. 2.50 per share.
The company also announced a cash dividend of Rs. 2.85 per share i.e. 28.505% higher. This is an addition to the interim dividend already paid at Rs. 2.50 per share.
However, after declaring an impressive result, the company‘s shares couldn’t get the spotlight. At the time of filing this report, FFC’s shares at the bourse were trading at Rs. 94.56, down by Rs. 0.49 or -0.52% with a turnover of 279,000 shares on Monday.
Things might get tough in terms of urea demand for the company which will slow down the expected urea sales. The decline in international urea prices could be a major dent for the company. Moreover, unfavorable decisions related to GIDC can further dampen the sentiments.