Fauji Fertilizer Posts Over Rs. 17 Billion in Profit Despite Flat Sales

Fauji Fertilizer Company (FFC) Limited, which is Pakistan’s largest urea manufacturing company, has announced its financial result for the year that ended on December 2019. Fauji Fertilizer Company (FFC), despite a number of hardships and challenges, had a great year.

FFC’s booked an unconsolidated profit of Rs. 17.11 billion for the year-end, up by 18.60% compared to Rs. 14.43 billion earned in the same period last year.

The revenues for the year remained almost flat at Rs. 105.75 billion, as compared with Rs. 105.96 billion recorded last year.


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According to a market expert, the sales remained flat due to an increase in urea prices which was offset by a decline in DAP offtake.

However, the cost of sales of the company came down by 3.77% to Rs. 75.04 billion as compared with Rs. 77.98 billion in the same period last year. This took the gross profit to Rs. 30.73 billion, showing a growth of 9.87% as compared with Rs. 27.97 billion.

Earnings per share (EPS) were posted at Rs. 13.45 compared to Rs. 11.35 in the same period of last year. The company also announced a final cash dividend of Rs. 3.25 per share, i.e. 32.50%. This is in addition to interim dividends already paid at Rs. 7.75 i.e. 75.50%

The finance cost increased to Rs. 2.47 billion, up by 51.53% as compared with Rs. 1.63 billion recorded in the same period last year. The increase in finance cost was mainly due to high-interest rates charged on working capital financing.

Other income of the company for the year was reported at Rs. 7.19 billion as compared to Rs. 6.28 billion recorded last year, showing an increase of 14.50% due to a large amount of cash withheld for GIDC settlement, which is invested in short term investments.

FFC’s shares at the stock exchange closed at Rs. 105.51, down by Rs. 0.04 with a turnover of 1.51 million shares, on Thursday.

Outlook

Foundation securities, in its report, has stated that they expect GIDC reduction to be neutral for FFC as prices will be reduced accordingly in the near term. FFC pricing power will increase significantly due to constrained urea supply in CY20. This, along with rejuvenation of dividend income from FFBL and AKBL, will enhance the company’s profitability going forward.

The report also noted that better agronomics along with constrained urea supply will keep pricing power with the FFC.

Besides, FFC is expanding into power and offshore fertilizer and has acquired 30% stake in 330MW coal mine mouth power plant of Thar Energy Limited (TEL). Moreover, FFC is also planning to set up a 1.3 million ton fertilizer complex in Tanzania, said the report.



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