FFC: Higher Urea margins kept earnings upbeat

April 28, 2021 (MLN): Fauji Fertilizer Company (FFC) has unveiled its financial statement for the 1QCY21 today wherein the company reported a 40% YoY surge in net profits which stood at Rs6bn as compared to the profit of Rs4.28bn in the same period last year (SPLY).

This translated into earnings per share (EPS) of the company which grew to Rs4.72 compared to EPS Rs3.37 reported in the SPLY.

In conjunction with the results, the company announced an Interim Cash Dividend of Rs3.5 per share i.e., 35% for the period mentioned above.

The improvement in the company’s profitability during the quarter can be attributed to improved pricing dynamics of both the Urea and DAP segments.

During the quarter, FFC’s revenue improved by 5.2% on account of an 85% YoY massive jump in DAP off-take and a 35% YoY surge in DAP prices. However, urea offtake dipped by 2% YoY followed by a drop in urea prices by 5% YoY during 1QCY21.

The gross margins of the company witnessed improvement and settled at 39% compared to 36% in SPLY owing to improved urea margins following the removal of the GIDC levy.

On the expenses front, the company observed a meager decline in terms of Administrative expenses and distribution cost by 1.2% whereas other expenses surged by 28.7% to Rs724mn mainly due to the unwinding of GIDC liability during the period under review.

In addition, the financial cost of the company saw a major decline by 42.7% on the back of lower interest rates and a decline in debt levels.

On the tax front, the company incurred an effective tax rate of 29% compared to 28% in 1QCY20.

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