Fauji Fertilizer Bin Qasim corporate briefing session on 8th Feb’23

The management of Fauji Fertilizer Bin Qasim Limited (FFBL) held a corporate briefing session on 8th Feb’23 to discuss the CY22 financial result and future outlook.

Brief Takeaways

·      To recall, the company posted a profit after tax of PKR 2,328mn (EPS: PKR 1.80) in CY22 against PKR 6,391mn (EPS: PKR 4.96) in SPLY, down by 64% YoY. The decline in profitability during CY22 was attributable to i) imposition of super tax (~PKR 2.8bn) in CY22, ii) exchange loss (~PKR 6.8bn), and iii) higher finance cost owing to hike in interest rate.

·      The production of DAP in CY22 witnessed a growth of 7% YoY, settling at 848k tons (highest ever production) given availability of gas in CY22.

·      The company’s market share of DAP improved to 56% in CY22 compared to 42% in SPLY. However, DAP sales declined by 16.4% YoY to settle at 661k tons which, as per the management, is due to higher DAP prices, floods, weak farm economics, and delay in agriculture package.

·      The company’s market share in urea remained stable at 8%, while the sales witnessed an uptick of 4.3% YoY to clock in at 523k tons. The management said that many farmers substituted DAP with urea due to higher price of DAP.

·      The management shared that the company has completed 18 day ATA of DAP plant and resumed operations.

·      According to the management, the average prices of phosphoric acid is expected to be USD 1,025/ton during 1QCY23.

·      The management informed that the current retention price of DAP is PKR 10,380/bag (ex-Karachi). The management expects the domestic DAP prices to climb up further owing to a sharp Pak Rupee devaluation against the greenback

·      The management highlighted that FFBL Power Company Limited (FPCL) continues to remain profitable. The management further told that the company mixes Thar and Afghan coal with coal procured from other countries. The management shared that 30% of coal used is local, while remaining 70% is international coal.

·      Moreover, the management informed that despite LC issuance is curtailed in the country amid lower SBP reserves, the company’s LCs are being honored and was able to procure phosphoric acid. The management further informed that the company usually has an inventory level of 20k – 25k tons of phosphoric acid.

·      The management informed that the company’s meat business (Fauji Meat Ltd) was able to reduce losses by 24% YoY during CY22. Moreover, the Fauji Meat Ltd is tapping into international markets. 

·      The management told that Fauji Food Limited (FFL) posted a revenue growth of 44% YoY in CY22. In addition to this, Fauji Group made an equity injection of PKR 11bn into the business during CY22.

·      Regarding Pakistan Maroc Phosphore S.A (PMP), the management expects joint venture company’s operations to remain stable and continue to give dividends. 

·      The company estimates that the exemption of output tax had an adverse impact of ~PKR 2.5bn – PKR 4.0bn on company’s gross profit in CY22. In this regard, the company is seeking a relief from the government.

·      The company projects industry’s DAP offtake to reach 1,700k tons, respectively in CY23. The management believes that upcoming wheat harvest will improve farm economics, which will enable farmers to procure more DAP.

·      Upon a question regarding gas supply, the management informed that on average 53-55 mmcfd of gas available to the company. However, the availability of gas depends on the season.


Courtesy – AHL Research

Posted in Fertilizer & Petrochemical Industries.

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