Fauji Fertilizer Company Limited (FFC) disclosed its financial result today where the company posted net profit of PKR 13,079mn (EPS: PKR 10.28) during 1HCY23 against PKR 9,599mn (EPS: PKR 7.55) in 1HCY22, up by 36% YoY. On the other hand, the profitability in 2QCY23 climbed up by 59% YoY to PKR 5,349mn (EPS: PKR 4.20). In addition to the result, FFC announced a cash dividend of PKR 3.15/share in 2QCY23 (PKR 7.41/share in 1HCY23).

Result Highlights

· Topline witnessed a jump of 32% YoY during 1HCY23, settling at PKR 71,958mn on the back of a surge in urea and DAP prices. Meanwhile, urea and DAP offtake declined by 4% YoY each. On a quarterly basis, the net sales during 2QCY23 increased by 25% YoY amid i) 36% and 3% YoY hike in urea and DAP prices, respectively, and ii) 1% uptick in DAP sales.

· The gross margins during 1HCY23 improved by 520bps YoY to 43.4% on account of higher urea prices and lower DAP offtake. Whereas, gross margins in 2QCY23 arrived at 46.8% (up by 619bps YoY) owed to better margins on urea.

· Financial charges ascended by 32% YoY, clocking in at PKR 2,657mn in 1HCY23 owing to higher interest rates. In 2QCY23, the financial charges arrived at PKR 1,193mn, depicting a jump of 26% YoY due to the aforementioned reason.

· Other income plummeted by 15% YoY, clocking in at PKR 6,295mn in 1HCY23, given lower dividend income from associates, and subsidiaries. During 2QCY23, other income settled at PKR 2,750mn, down by 30% YoY due to the same reason.

· The company booked effective taxation at 61% in 2QCY23 vis-à-vis 68% in 2QCY22. It is pertinent to note that the company booked super tax of 6% and 10% on PBT of CY22 and 1HCY23, respectively.

Courtesy – AHL Research