FFBL's Q3 profit hits Rs8bn

October 23, 2024 (MLN): Fauji Fertilizer Bin Qasim Limited's (PSX: FFBL) profit after tax surged to Rs8 billion (EPS: Rs 6.20) during the third quarter of 2024, marking a 51% YoY increase compared to the same period last year.

This remarkable performance was driven by improved gas availability, which reached 84% of the allocation (2023: 54%), resulting in Urea production and sales volume increasing by 118% and 98%, respectively, compared to the same quarter last year (SQLY), significantly reducing the need for urea imports.

Additionally, improved international DAP margins contributed substantially to the financial results for the period under review.

Finance costs were reduced by Rs1.6bn compared to SQLY (2024: Rs 0.8bn; 2023: Rs2.4bn).

Overall, during the nine months under review, FFBL's performance was largely driven by a stable foreign exchange rate and robust international DAP margins as the company posted a profit after tax of Rs18.6bn.

With the support of the government, gas supply to FFBL improved to 77% of the allocation as compared to 56% in SPLY, resulting in higher production of Urea and DAP, Urea sales volume increased by 42% as compared to SPLY (2024: 361KT; 2023: 254KT), significantly substituting the urea imports.

Finance costs were reduced by Rs4.8bn (2024: Rs2.9bn; 2023: Rs7.7bn). Meanwhile, exchange loss decreased by Rs4.4bn (2024: Rs0.2bn; 2023: Rs4.6bn), a cost which the Company had to bear during the SPLY but was averted this year due to a stable PKR against US Dollar.

On a consolidated basis, the Group reported a PAT of Rs 26.4 billion, a significant rise compared to Rs0.2bn in SPLY.

Additionally, better financial results from the joint venture (PMP) and associate (AKBL) contributed Rs3.1bn in profit (2023: loss of Rs1.2bn) and Rs3.2bn (2023: Rs2.6bn) respectively to the Group's overall results.

Future Outlook:

The sustainability of the fertilizer sector relies heavily on a stable gas supply. Optimizing the allocation of indigenous gas is crucial for maximizing the use of this natural resource.

This strategy not only reduces risks to food security but also conserves significant foreign exchange by minimizing the need for imports.

"As part of our strategic outlook, we are constantly exploring synergies to enhance operational efficiencies and create greater value for stakeholders," the company's filing reads.

The proposed merger between FFBL and FFC is an initiative towards optimizing resource utilization.

The company expects the merger to unlock further growth opportunities, improve cost management, and enhance shareholder returns.

"We remain committed to pursuing initiatives that will strengthen the financial performance and long-term sustainability of the business," it added. 

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