Fauji Fertilizer Bin Qasim Limited (FFBL) announced its 1QCY24 result today, where the company posted earnings of PkR4.3bn (EPS: PkR3.3) compared to PkR4.0bn (EPS: PkR3.1) in 4QCY23, an increase of 6%QoQ. The said earnings growth is predominantly attributed to a normalized tax charge during the quarter, in contrast to one-time tax adjustments in the preceding quarter. The result come in line with market and our expectations.

·         Topline clocked in at PkR46.5bn vs. PkR56.2bn in the preceding quarter, a 17%QoQ decline, mainly due to a reduction in offtakes, with DAP and Urea sales falling by 25% and 8% during the quarter, respectively.

·         Gross margins contracted to 18.9% vs. 28.4% in 4QCY23, with the decline likely attributable to upward adjustment in gas pricing from Feb’24.

·         Operating expenses experienced a 48% quarterly decline to PkR2.8bn, possibly due to lower transportation expenses amidst the aforementioned lower offtakes.

·         Other income clocked in at PkR4.0bn (↑28%QoQ) due to a surge in short-term investments to PkR33.7bn in Dec’23 accounts from PkR13.1bn at Sept’23 end.

·         Finance costs witnessed a 11%QoQ decline to PkR1.0bn vs. PkR1.1bn in the preceding quarter, likely attributed to reduced debt levels.

 Courtesy – AKD Research