Fauji Fertilizer Group (FFC+FFBL) held its corporate briefing today to discuss the financial results 1HCY24 and the future outlook.
Key highlights of the briefing are as follows:
Total urea offtake (FFC+FFBL) during 1HCY24 increased to 1.59mn tons compared to 1.42mn tons in 1HCY23, with the Fauji fertilizer group increasing its market share from 46% to 52%.
DAP offtake in 1HCY24 increased by 22% YoY to 0.39mn tons compared to 0.32mn tons in 1HCY23. Fauji fertilizer group market share for DAP improved to 72% from 64% in 1HCY23.
FFC’s three plants have all operated at over 100% utilization levels, with Plant I at 113%, Plant II at 118%, and Plant III at 109%.
FFBL’s urea and DAP production increased by 26% and 66% to 230k tons and 392k tons, respectively, due to better gas availability and no plant shutdown.
The delta between local and international price per bag for Urea is around PkR 2,500/bag.
As per the management, international DAP to Phos margins in 2QCY24 were USD 98/ton al DAP vs. USD 127/ton in the preceding quarter. Moreover, the company expects international prices to remain firm, with dollar parity anticipated to stay stable.
FFBL is expected to have a plant turnaround in 1QCY25. Furthermore, the turnaround cycle for FFC and FFBL has extended to 3 years and two years, respectively, from the previous two years and one year.
In response to the question about the gas price hike and gas supply, the management stated that they have a contract with Mari that extends until 2029.
Regarding the amalgamation, FFC’s management noted that it will bring several efficiencies to the company. They expect the swap ratio to be finalized by the end of September 2024 and have appointed KPMG as the consultant for this transaction.
FFC’s management highlighted their plan to open 70 Sona centres nationwide, aiming to establish a direct-to-farmer channel. To date, the company has inaugurated three centres.
FPCL achieved 80% plant availability in 1HCY24 vs 64% in the same period last year by optimizing energy costs by blending local coal (~34%). Additionally, the company is importing coal with specifications similar to Thar coal at a lower cost.
Per management, PMP is currently undergoing a capacity enhancement project and experiencing satisfactory operations.
To recall, FFC and FFBL reported their highest-ever profits of PkR 26bn and 10.5bn in 1HCY24. This significant surge in the bottom line was driven by higher other income, which contributed 35% and 44% to FFC and FFBL’s PBT, respectively.
Courtesy: BMA Research
