Fatima Fertilizer Company Limited (FATIMA) announced its 1QCY23 result today, where the company posted NPAT of PkR4.3bn (EPS: PkR2.06), remaining flat on a QoQ basis while decreasing by 24% on the yearly basis. The result is above our expectations on the back of a substantial improvement in gross margins for the company.

* Revenue for the quarter clocked in at PkR33.5bn, a decrease of 37%QoQ owing to lower offtakes in the quarter. On the flipside, Revenue has increased by 15% on the yearly basis due to higher prices for the company’s offerings.

* Gross margins for the company have posted at 42.2% for the quarter, a substantial increase when compared to the 20.2% posted in the previous quarter, while remaining flat on the yearly basis. To recall, gross margins had decreased in 4QCY22 due to the Fatima Fert plant, which is run on RLNG.

* Finance costs for the company have clocked in at PkR1.0bn, remaining flat on the quarterly basis, while posting an increase of 1.4x YoY as high interest rates along with higher borrowings have dented profitability.

* Other Income for the company has clocked in below expectations at PkR800mn, a decrease of 19%QoQ while posting an increase of 135%YoY.

* Taxation of the quarter has posted an ETR of 41% for the quarter, higher than expectations and clocking in at PkR3.0bn.

Courtesy- AKD Research