FFBL’s profitability is expected to decline by 4%YoY to PkR5.1bn (EPS: PkR3.9) in 3QCY24E, compared to PkR5.3bn (EPS: PkR4.1) in the SPLY, primarily driven by lower sales volumes. Topline is expected to shrink by 21%YoY, mainly due to 37%YoY drop in the company’s DAP offtakes.

However, a 98% % year-over-year increase in urea offtakes minimized the impact. Gross margins are projected to improve to 17.7%, up from 14.8% in the SPLY, mainly due to a higher proportion of urea sales (a high-margin product) in the total sales mix.

Moreover, other income is expected to increase by 17%YoY, supported by higher short-term investments than SPLY. Additionally, finance costs are expected to decline by 47%YoY, owing to lower expected debt levels given improved cashflow generation. This brings 9MCY24E earnings to PkR15.7bn (EPS: PkR12.1), compared to PkR354mn (EPS: PkR0.3) in the SPLY, as the company posted a significant loss in 1QCY23 due to exchange losses. We do not expect the company to announce a dividend.