FFBL held a corporate briefing session to discuss the 3QCY21 financial result and future outlook today.
Highlights:
· To recall, the company posted an earnings of PKR 2,275mn (EPS: PKR 1.77) against PKR 3,306mn (EPS: PKR 2.56), down by 31% YoY. The fall in profitability during 3QCY21 is attributable to i) higher other expenses given the company recorded expected credit loss on receivables of Fauji Meat Limited (FML) and ii) impairment of equity investment in FML which offset the gain on sale of FWEL I & II. With this, in 9MCY21, the company posted a profit after tax of PKR 6,150mn (EPS: PKR 4.78) against a loss of PKR 901 (LPS: PKR 0.70) owed to i) 2% and 56% YoY higher urea and DAP prices, ii) better DAP margins and iii) higher dividend income from subsidiaries.
· The company told that due to restriction placed by China on exports tagged with surge in demand by importing countries, DAP prices have witnessed a hefty jump of (USD 674/ton on 1st Nov’21 compared to USD 395/ton on 1st Jan’21).
· The company informed that losses from FML have reduced during the quarter. In addition to this the company is pondering whether to divest by entering in to a joint venture or completely selling it off or revive the meat business completely by restructuring.
· The company expects consistent dividends from FPCL and PMP.
· The company told that during 9MCY21 the company has a market share of 8% and 43% in urea and DAP, respectively, in terms of offtake.
· The company forecast DAP margins to remain healthy in the future.
· The company anticipates the urea and DAP sales by the end of CY21 to be 6.4mn/tons and 2.0mn/tons, respectively.
· The company told that refund pending from Government has significantly climbed up. In this regard the company is in touch with the government and expects government to bridge the gap between input and output tax.
· The company informed that during 4QCY21 the company will be procuring phosphoric acid at USD 1,330/ton.
· The company told that the government has been supportive to the company and is making sure that uninterrupted gas supply is there to meet the fertilizer demand during Rabi season.
Courtesy – AHL Research