Higher offtake, prices boost FATIMA’s Q1 earnings

April 28, 2021 (MLN): Fatima Fertilizer Company Ltd (FATIMA) has unveiled its financial results for the first quarter wherein the company posted net profits of Rs 3.77bn (EPS: Rs 1.80), depicting a rise of 53% YoY as opposed to the net profits of Rs 2.46bn (EPS: Rs 1.17) reported in the corresponding period last year.

The increase in earnings is primarily attributable to higher CAN/NP/DAP offtake which increased by 1.2x/1.2x/2.2x YoY along with price hikes, a report by Intermarket Securities (IMS) mentioned.

Due to higher fertilizer offtake and better pricing dynamics, net revenue increased by a massive 50% YoY to  Rs 21.6bn during 1QCY21. Accordingly, gross profit jumped by 41% YoY to Rs 9.3bn. However, gross margin declined by 3ppt to 43% during the same period.

On the cost front, the major expense head i.e., distribution expenses witnessed an upsurge of 68% YoY to Rs 1.55bn as compared with Rs 928mn in 1QCY20. This can be attributed to higher fertilizer offtake.

Meanwhile, the company registered a decline of 57% YoY in finance cost to stand at Rs 542mn during the said period on the back of lower interest rates, which supported the bottom-line growth. Also, other income came down by 51% YoY to Rs 98mn. FATIMA has booked a re-measurement loss on GIDC payable in other income as well, in view of IMS.

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