FATIMA just announced its 2QCY23 results, posting a PAT of PkR1.2bn (EPS: PkR0.59/sh) vs. PAT of PkR0.2bn (EPS: PkR0.07/sh) in the SPLY. On a QoQ basis, the company posted a 71.4% drop in earnings due to the impact of high taxation, mainly because of super tax. Total 1HCY23 EPS came in at PkR2.65/sh vs. PkR0.15/sh earned during 1HCY22. Further, the company has announced an interim dividend of PkR1.75/sh.

· Revenues rose by 39.6%QoQ to PkR46.8bn vs PkR33.5bn in 1QCY23 and by 41.0%YoY against 2QCY22. In our opinion, Revenues increased primarily because of higher fertiliser prices, especially urea and urea offtakes from Fatimafert.

· Gross margins dropped to 30.5% against 42.2% last quarter and 48.4% in the SPLY. We opine that PP12 and RLNG dollar-linked prices have inflated COGS mainly due to rampant PkR devaluation.

· Finance cost rose significantly by 51.4%/99.7% QoQ/YoY due to high interest rates and heavy exchange losses. Expenses and charges remained lower compared to last quarter and SPLY.

· Effective taxation came in at a staggering 85.7%, eroding the bottom line almost completely due to the impact of super tax. We expect this to burden the bottom line for the remaining half of the year.

Courtesy – AKD Research