Fauji Fertilizer Company (FFC) Limited, which is Pakistan’s largest urea manufacturing company, has announced its consolidated financial results for the first quarter that ended on March 31st, 2020.
FFC’s booked a consolidated profit of Rs. 4.28 billion for the quarter, surging by 129% as compared to Rs. 1.87 billion earned in the same period last year. Alongside the result, the company also announced a cash dividend of Rs. 2.5 per share.
The company’s sales saw a marginal increase of 2.1% to Rs. 21.40 billion as compared to Rs. 20.96 billion recorded last year. According to a report by Topline Securities, the revenue of the fertilizer business increased by 2% year on year during the period, where high volumetric sales of urea by 5% covered for lower prices.
DAP sales remained under pressure as they were down 32% compared with last year.
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The cost of sales was posted at Rs. 13.64 billion, down by 8.02% as compared with Rs. 14.83 billion in the corresponding period of last year. This took the gross profits to Rs. 7.75 billion, up by 26.43% as compared to Rs. 6.13 billion last year.
The gross margins in the fertilizer business increased to 36.3% during the quarter as compared with 29.4% in the same period last year on the back of high urea offtake and exemption of GIDC. The finance cost of the company increased by 28.90% to Rs. 857.14 million as compared with Rs. 665.22 million due to high-interest rates in the country during the period.
Other income of the company soared by 86.71% to Rs. 1.77 billion as compared to Rs. 948 million recorded in the corresponding period of the last year. Increase in other income was coupled with other factors, in which one was due to high the interest rates in the country as it enjoys good cash liquidity.
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FFC also booked a share of profit from associates and JV of Rs. 2.03 million versus a loss of Rs. 667.15 million in the same period last year.
Earnings per share of the company grew to Rs. 3.37 as compared with Rs. 1.47.
At the time of filing this report, FFC’s shares at the bourse were trading at Rs. 107.50, up by Rs. 0.84 or 0.79% with a turnover of 1.06 million shares.
The gross margin of this company has reached 36.3%. This means that the company is getting the huge profit from a very essential product. After raising the price by 36% then the retailers add another 30% on top of this price. This means that the fertilizer is reaching the end user ( Farmer ) after a price increase of more than 60%.
It is also known as Illegal Profiteering from the poor farmers. Nobody can question the Monopoly of some fertilizer producers and they are looting the farmers with their both hands.
The worst part is that despite huge profits our government is giving billions of gas and tax subsidies to them.
Where is the “Competition Commission of Pakistan” and NAB?.
Company is earning good profits but retailers are hardly earring 1 to 2% . Even sometime retailers compel to sale the product at loss due to unclear Fertilizer price policy of Govt. Most of the time, govt spread a rumour that prices are going to down due to subsidy, retailers start to sell product on loss in panic.
There should be very clear pricing policy of Fertilizer because prices are regulated by Govt.