FFC’s profitability jumps on higher offtakes

April 27, 2022 (MLN): Fauji Fertilizer Company (FFC) has unveiled its financial statement for the 1QCY22 today wherein the company reported a 43% YoY surge in net profits which stood at Rs8.5 billion as compared to the profit of Rs6bn in the same period last year (SPLY).

This translated into earnings per share (EPS) of the company which grew to Rs6.76 compared to EPS of Rs4.72 reported in the SPLY.

In conjunction with the results, the company announced an Interim Cash Dividend of Rs3.70 per share i.e., 37% for the period ended on March 31, 2022.

The improvement in the company’s profitability is attributed to increase in Urea offtake amid better retention prices, an increase in other income due to higher interest income on cash held by the company and dividend income from portfolio companies, and a lower effective tax rate.

During the quarter, FFC’s revenue improved by 26.7% while the cost of sales surged by 34% YoY which dragged the gross margins of the company to 36% compared to 39% in SPLY.

On the expenses front, the company observed an increase in administrative expenses and distribution costs by 10.3% while the other expenses inched up by 1.2% YoY to Rs529mn.

In addition, the financial cost of the company surged by 2.6x YoY to 1.28bn on the back of higher interest rates.

The company also booked a reversal of Rs529mn GIDC re-measurement gain on GIDC liability.

On the tax front, the company incurred an effective tax rate of 24% compared to 29% in 1QCY21.

FFC is expanding into power and offshore fertilizer complex. FFC has acquired a 30% stake in the 330MW coal mine mouth power plant of Thar Energy Limited (TEL). Moreover, FFC is planning to set up a 1.3mn ton fertilizer complex in Tanzania, a report by Foundation Securities noted.

Copyright Mettis Link News