Fauji Fertilizer Company (FFC) announced its financial result today, where the company has posted an unconsolidated profit of Rs6,240mn (EPS: Rs4.90), up 7% YoY and 4% QoQ. The result came in line with our expectations.

Alongside the result, the company announced an interim cash dividend of Rs3.70/share, lower than our expectation of Rs4.0/share.

Gross Margins decreased by 3.5ppts YoY to clock in at 36% in 1Q2022. On a sequential basis, margins improved by 2.8ppts on better retention prices.

The company’s net sales increased by 22% YoY during 1Q2022, owing to an increase in Urea offtakes by 10% YoY to 631k tons and an increase in DAP prices by ~100% YoY.

Other Income rose by 27% YoY to Rs3,459mn in 1Q2022 due to higher dividend income, higher short-term investments, and higher interest rates. Foundation Energy I and II has announced a dividend income of Rs1.26bn for FFC in 2021.

Finance costs increased by 155% YoY and 28% QoQ to Rs647mn amidst a high level of debt and higher interest rates.

Distribution expenses were higher by 9% YoY to Rs2,186mn in 1Q2022, driven by an increase in volumetric sales of Urea and higher fuel cost.

The effective tax rate clocked in at 25% in 1Q2022 compared to 27% in 1Q2021.

Courtesy – AHCML Research