FFBL Posts Highest Ever Quarterly Profit of Rs. 6.2 Billion in Q2 2024

Fauji Fertilizer Bin Qasim (PSX: FFBL) announced its 2QCY24 financial result today, where it recorded its highest-ever unconsolidated quarterly profit of Rs. 6.2 billion versus a profit after tax of Rs. 479 million reported in the same period last year. According to Arif Habib Limited (AHL), this came due to growth in urea and diammonium phosphate (DAP) offtake, lower phosphoric acid prices, and dividend income from PMP during the quarter. This takes 6MCY24 earnings to Rs. 10.5 billion compared to a loss of Rs. 4.95 billion in SPLY. The company didn’t announce any dividend payouts to its shareholders for the period in review. FFBL said a steady foreign exchange rate, higher international DAP margins and improved gas availability were the key drivers of its performance during the period in review. Higher sales volume of DAP 351 KT (including 24KT of imported DAP) (2023: 274 KT) and Urea 216 KT (2023: 180 KT) during the six-month period and improvement in plant efficiency in the second quarter also contributed to the Company’s financial performance. With the support of GoP, FFL said it successfully managed to improve the gas supply to the FFBL. During the six-month period under review gas supply improved significantly to 74 percent of the allocated volume as compared to 53 percent in SPLY, which resulted in higher production of Urea and DAP. Proactive working capital management resulted in a substantial reduction in finance costs to Rs. 2.1 billion during the six months (2023: Rs. 5.3 billion) and Rs. 1.1 billion in Q2 (2023: Rs. 2.8 billion). Bank deposit income increased by Rs. 3.9 billion during the six months from SPLY and Rs. 1.7 billion in Q2 from SQLY. Other income also includes a dividend of Rs. 1.6 billion in Q2 from PMP and Rs. 0.8 billion in Q1 from Askari Bank Limited. The Company did not incur significant exchange loss during the period, which had negatively impacted the results of SPLY by Rs. 4.7 billion. On a consolidated basis, the Group is reporting a profit after tax of Rs. 15.9 billion, marking a significant improvement from a loss after tax of Rs. 3.2 billion. in SPLY. This upswing is primarily attributed to the Parent Company’s (FFBL) improved profitability. The improved financial performance of its joint venture (PMP) and associate (AKBL) has also contributed a profit of Rs. 2.5 (2023: loss of Rs. 0.8 billion) and Rs 2.3 billion (2023: profit of Rs. 1.7 billion) in the consolidated results during the six months period respectively. The sustainability of the fertilizer sector is heavily dependent on a consistent supply of gas. To ensure this, the allocation of indigenous gas should be optimized to capitalize on the natural resource. This strategy not only mitigates the risk to food security but also saves substantial foreign exchange by reducing the need for imports. The company posted earnings per share (EPS) of Rs. 4.84 during Q2 and an EPS of Rs. 8.18 for 6MCY24. At the time of filing, FFBL’s scrip at the bourse was Rs. 42.92, down by 1.54 percent or Rs. 0.65 with a turnover of 24 million shares on Thursday.