FFBL Profit Down By 48% in 2023 Amid High Taxes

Fauji Fertilizer Bin Qasim Limited (PSX: FFBL) has announced its financial results for the calendar year that ended on December 31, 2023, (CY23), wherein the company posted a consolidated profit after tax (PAT) of Rs. 4.1 billion, down 48.2 percent year-on-year (YoY) from Rs. 8 billion in CY22. Along with the result, the company announced a final cash dividend for CY23 of Rs. 1 per share i.e. 10 percent. The Deputy Head of Research at JS Global Waqas Ghani told ProPakistani, He added, “On a positive note, gross margins improved to 28% in the last quarter, driven by higher retention prices and lower phos-acid costs in rupee terms. The company declared a final dividend of Rs. 1 per share, marking its first cash payout since CY18”. In a brief commentary, FFBL reported an operating profit of Rs. 31 billion but said the profit after tax declined to Rs. 4.1 billion primarily on account of loss in Pakistan Maroc Phosphore S. A (PMP), which is affected by international commodity price trends i.e. high decrease in phosphoric acid price as compared to its raw material prices. In CY23, the net sales of the company arrived at Rs. 221.6 billion, up by 21 percent YoY. Gross margins clocked in at 20 percent during the period in review. Other income of the company jumped by 172 percent YoY to Rs. 7.6 billion in CY23, while the finance cost of the company surged by 51 percent YoY to Rs. 12.6 billion during the period in review. FFBL paid Rs. 12.9 billion in taxes during the 12-month period. The company attributed the increase in finance cost, exchange loss (Rs. 4.5 billion), and tax expense to the government’s retrospectively increased rate of super tax from 4 percent to 10 percent on profit of the previous year apart from 10 percent super tax applicable to profit of the current year. The company posted basic and diluted earnings per share (EPS) of Rs. 2.35 and an EPS of Rs. 3.6 from continuing operations in CY23. The company’s scrip at the bourse closed at Rs. 29.48, down 3.53 percent or Rs. 1.08 with a turnover of 24.1 million shares on Thursday. The availability of gas at the government-allocated level remained the main challenge for FFBL during the year. This not only impacted the company’s production but also added to the challenges of the farming community in the form of product shortage and price manipulation by middlemen throughout the year. As a result, the Government was also forced to import 220KT of Urea from the international market. FFBL commented that it faced economic challenges including adverse fluctuation of PKR against USD, escalating borrowing rates and levels, inequitable GST laws, and volatility in the international market prices of phosphatic fertilizer. It also said the turnaround in the second half of CY23 was achieved through focused management efforts by improving the supply chain economics, tight controls on cost, higher efficiencies at the plant, and financial discipline. Looking ahead, the company said securing gas supply at the allocated levels will continue to be a challenge for consistent fertilizer production. FFBL strongly urges the government to ensure consistent gas supplies to the fertilizer sector, benefitting the farming community through the availability of fertilizer at affordable prices and eliminating the need for fertilizer imports, ultimately contributing to the growth of agriculture sector and the economy of the country. The domestic and international OAP market forecast remains stable, contingent upon the geopolitical landscape, it added.