Fauji Fertilizer’s Profit Rose by 30% YoY in Q3 2020

Fauji Fertilizer Company (FFC) Limited, Pakistan’s largest urea manufacturing company, has announced its unconsolidated financial results for Q3 2020.

FFC booked an unconsolidated profit of Rs. 4.62 billion for the quarter, surging by 30% as compared to Rs. 3.56 billion earned in the same period last year. Alongside the result, the company also announced a cash dividend of Rs. 2.55 per share. This takes the final cash dividend to Rs. 7.80 per share for 2020.

Fauji Fertilizer’s nine months’ profit reached Rs. 13.76 billion, up by 10.50% as compared to Rs. 12.46 billion earned last year.

According to a report by Topline Securities, the company’s sales went down by 7% to Rs. 24.63 billion as compared to Rs. 26.53 billion recorded last year amidst a decline in urea offtake by 3% year on year and average urea prices declining by 14% year on year.

However, DAP sales increased by 25% to 93,000 tons in Q3 2020 while average prices declined by 3% as compared with the same period last year. The cost of sales of the company was reported at Rs. 16.36 billion, down by 17% as compared with Rs. 19.70 billion. Gross profits increased by 21.30% to Rs. 8.27 billion as compared to Rs. 6.28 billion.

The gross margins increased by 7.8% to 33.6% in Q3 2020 from 25.7% in the same period last year. This was mainly due to the removal of GIDC, while the price decline has not been proportionate.

The finance cost decreased by 51% to Rs. 271 million as compared to Rs. 557 million due to lower borrowing and interest rates. Similarly, the other income declined by 39% to Rs. 951 million as compared to Rs. 1.55 billion mainly due to lower interest rates.

Earnings per share of the company grew to Rs. 3.64 as compared with Rs. 2.80.

At the time of filing this report, FFC’s shares at the bourse were trading at Rs. 107.76, down by Rs. 0.36 or 0.33%, with a turnover of 1.52 million shares on Wednesday.

Furthermore, in a notice filed to PSX, FFC has disclosed that the board of directors has approved the submission of Expression of Interest (EOI) for the acquisition of majority shares, in Foundation Wind Energy-I Limited and Foundation Wind Energy-II Limited, collectively held by Fauji Fertilizer Bin Qasim and Fauji Foundation.

The abovementioned EOI will be followed by detailed due diligence of the targets and the acquisition, if determined feasible, will be subject to negotiation with existing majority shareholders, approvals of the board and company shareholders, procurement of requisite regulatory approvals, and fulfillment of related customary conditions.



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