Fauji Fertilizer Company Limited (FFC) announced its 1QCY23 result today, where the company posted an unconsolidated NPAT of PkR7.7bn (EPS: PkR6.1), an increase of 48%QoQ and 24%YoY and in line with our expectations. Furthermore, the company announced an interim dividend of PkR4.3/sh, taking the company’s payout ratio to 70%.
* Revenue for the quarter clocked in at PkR36.4bn, an increase of 21%QoQ and 38%YoY and higher prices and better offtakes pushed the company’s topline upwards.
* Gross margins for the company have posted at 40.0% for the quarter, a notable improvement over the 32.2% recorded in the previous quarter and the 35.6% recorded in the SPLY.
* Operating Profit for the company has been recorded at PkR11.5bn, as operating expenses for the company have clocked in below expectations.
* Finance costs for the company have clocked in at PkR1.5bn, decreasing by 11%QoQ likely due to a reduction in ST borrowings, while increasing by 37%YoY compared to the PkR1.1bn recorded in 1QCY22.
* Other Income for the company has clocked in below expectations at PkR3.5bn, a decrease of 15%QoQ while remaining flat on the yearly basis.
* As mentioned in our preview, the management has chosen to decrease its payout ratio from ~77% in the last two quarters to 70% in 1QCY23. This is likely on the back of the expected increase in gas prices for the company from the Mari wellhead.