The profitability of the Fauji Fertilizer Company Limited (FFC) dropped 16 percent to Rs5.24 billion in the third quarter of 2022 when compared to Rs6.45 billion same period of last year, mainly due to lower sales volume, according to the company filing to the Pakistan Stock Exchange.
The company also announced an interim cash dividend for the quarter that ended September 30, 2022, at Rs3.18 per share – 31.80%. This is in addition to Interim Dividends already paid at Rs5.80 per share i.e. 58%.
“Unprecedented floods led to the damage of large sown area in the country. The company stands with the flood affectees and is providing all possible support to fellow countrymen in these difficult times,” says FFC Chairman Waqar Malik.
Sona urea production of 1,808 thousand tonnes was 3% lower than last year mainly due to the shutdown of two plants for maintenance during the period as compared to last year. Higher import prices of DAP resulted in the agriculture sector switching to urea.
Urea demand in the Country thus increased as compared to last year. The increase in demand was met through higher production by RLNG-based plants besides imports by the Government, which increased the competition in the industry.
However, concerted marketing efforts enabled Sona urea sales by the Company of 1,795 thousand tonnes which was only 1 % lower than last year.
The FFC achieved a sale revenue of Rs79.18 billion compared to Rs73.59 billion last year.
Galloping inflation, hike in fuel prices, sharp devaluation of the Pak Rupee, and higher repair and maintenance costs of extended plant shutdown caused a significant increase in the operating cost of the company.
The imposition of super tax of around Rs4.69 billion over and above the normal tax liability (effective tax rate of 43%), combined with higher finance cost due to higher interest rates further impacted negatively on Company’s profitability.
Improved income on deposits and increased payout by the group companies led to other income of Rs. 10.28 billion compared to Rs. 5.92 billion last year. The Company was thus able to arrest the decline in profitability to Rs. 14.84 billion with an EPS of 11.67, which was only 7% lower than last year. The profitability in terms of US$ was registered at USD 75 million compared to USD 101 million last year.
The profit after tax for the 3rd Quarter was registered at Rs 5.24 billion compared to Rs 6.45 billion same period last year, mainly due to lower sales volume, which declined due to lower product availability as major portion of Sona urea production and imported DAP were marketed during the first half of 2022. Higher finance cost and imposition of super tax are also attributable to the decline in profitability.
The Consolidated revenue for the nine months stood at Rs 92.75 billion, 19% higher than last year, whereas the gross profitability registered a growth of 33% and was recorded at Rs 39.51 billion. However, profitability was negatively impacted by increase in interest rates and the levy of super tax. Total tax charge including super tax stood at Rs 14.15 billion compared to Rs 7.04 billion last period. Net profitability thus stood at Rs 25.48 billion compared to Rs 28.23 billion last year.