LAHORE: The Board of Directors of Fauji Fertilizer Company Limited (FFC) met on Monday to review the company’s performance and announced its financial results for the quarter ended March 31, 2020. As per the company’s financial results, the fertilizers manufacturer posted a consolidated profit after tax (PAT) of Rs4.286 billion as compared to PAT of Rs1.875 billion during the same period last year, showing an increase of 128.57pc. During the period under review, the company declared an unconsolidated PAT of Rs4.262 billion as compared to PAT of Rs3.696billion, showing an increase of 15.3pc.
The FFC consolidated turnover during the quarter ended March 31, 2020 stood at Rs21.403 billion as compared to turnover of Rs20.967 billion, showing an increase of 2.07pc.
Meanwhile, during a period under review the company’s unconsolidated turnover clocked in at Rs20.626 billion as compared to Rs20.311 during the same period last year, showing an increase of 1.55pc.
Sunny Kumar, a research analyst at Topline Securities Limited said that FFC announced its 1Q2020 financial results, where the company booked a consolidated profit of Rs4,286million (EPS: Rs3.37) compared to Rs1,875million (EPS: Rs1.47) in 1Q2020 and alongside results, the company announced cash dividend of Rs2.5 per share.
Kumar said that the revenue of the fertiliser business increased by 2pc YoY during 1Q2020, where higher volumetric sales of Urea by 5pc YoY covered for lower prices. The research analyst said that however, DAP sales remained under pressure; down 32pc YoY in 1Q2020.
He maintained that the gross margin of the fertiliser business increased by 7ppts YoY to 36.3pc in 1Q2020 from 29.4pc in 1Q2019, which is in line with our estimate. Kumar added that the finance cost increased substantially by 29pc YoY to Rs857million in 1Q2020 amidst higher interest rates. He shared that the company has booked a share of profit from associate and joint venture of Rs2million versus a loss of Rs667million, which is higher than our estimate. “Effective tax rate clocked in at 28pc in 1Q2020 vs. 39pc in 1Q2019,” he said.
Meanwhile, Ailia Naeem, a senior research analyst at AKD Securities Limited said that FFC announced its 1QCY20 result, whereby it posted a NPAT of Rs4.3billion (EPS: PkR3.35), up 15pc YoY but down 8pc QoQ.
Naeem opined that the YoY increase in earnings is attributable to 7ppt YoY higher gross margins of 36pc amid flattish topline, due to a delay in passing on the entire benefit of GIDC relief to the farmers. “However, 44% YoY higher finance cost amid higher interest rates and 14% YoY lower other income kept the bottomline growth in check,” the research analyst said. She added that on a sequential basis, the decline in earnings was a result of 37pc QoQ decline in topline led by 16pc QoQ lower urea offtake and Rs400 per bag reduction in urea price over 1Q.
However, 15pc QoQ lower distribution expense, 18pc QoQ lower finance cost and absence of impairment change contained the sequential earnings decline at 8pc, said Naeem. She said that the company also announced the first interim cash dividend of Rs2.50/share. FFC is the preferred name from Fertilizer space with a D/Y of 12.2pc and an upside of 26.2pc on offer at last close.
