Fauji Fertilizer Bin Qasim Profitability jumps up by 28% YoY in 1QCY22

Fauji Fertilizer Bin Qasim Limited (FFBL) announced financial result for 1QCY22 today where the company posted earnings of PKR 1,627mn (EPS: PKR 1.26) against PKR 1,266mn (EPS: PKR 0.98) in 1QCY21, up by 28% YoY. On a sequential basis, the bottom-line climbed up by a massive 7x QoQ owed to absence of allowance for expected credit losses related to FML.

Result Highlights

  • Net sales surged by 91% YoY to PKR 24,784mn during 1QCY22, on account of hefty jump in urea and DAP prices by 13% and 96% YoY, respectively tagged with growth in urea offtake by 56% YoY. However, DAP offtake dropped by 4% YoY in 1QCY22. On QoQ basis, topline settled at PKR 42,085mn, down by 41% amid decline in urea and DAP offtake by 9% and 60%, respectively.
  • Gross margins clocked-in at 21.75% in 1QCY22 (up by 270bps YoY), which is attributable to better DAP primary margins along with higher urea prices and offtake.
  • The other expense arrived at PKR 949mn in 1QCY22, up by 7x YoY owed to higher contribution to WPPF and WWF tagged with exchange loss on foreign currency account.
  • Other income plummeted by 29% YoY to PKR 1,116mn in 1QCY22 at back of lower dividend income from subsidiaries.
  • Financial charges witnessed an uptick of 8% YoY, clocking-in at PKR 706mn during 1QCY22 higher interest rates.
  • The company booked effective taxation at 36% in 1QCY22 vis-à-vis 26% in 1QCY21.

Recommendation

· Currently, we have a ‘BUY’ call on the stock with a Dec’22 target price of PKR 33.8/share.

Courtesy – AHL Research

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Posted in Fertilizer & Petrochemical Industries.

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