Fauji Fertiliser beats analyst expectations

KARACHI: Fauji Fertiliser has beaten analyst expectations after its profit after tax increased by 245 per cent in the half year ended June 30, 2010 as compared to the same period last year. The company’s gross profit for the same period; their turnover less cost of sales, had increased by 30 per cent.

The company posted profit after tax of Rs1.72 billion in the second half of the fiscal year, compared with Rs497 million last year.

Fauji Fertilizer Bin Qasim Limited (FFBL) declared a cash dividend of Rs1.3 per share according to the company’s financial results for the second half of the fiscal year 2010 released on Tuesday. Their earnings per share increased by 192 per cent to Rs1.84 per share as compared with Rs0.63 last year.

FFBL’s fertiliser sales during the second half of the fiscal year 2010 decreased by 20.5 per cent to Rs11.92 billion as compared with Rs14.99 billion during the same period last year. Their cost of sales decreased to Rs8.08 billion, compared with Rs12.04 billion last year.

This caused their gross profit to increase by 30 per cent to Rs3.83 billion as compared with Rs2.95 billion last year; the decrease in their cost of sales was larger than the decrease in their turnover.

Their other operating income grew by a massive Rs397 million in the second half of fiscal year to Rs493 million in the period ended June 30 as compared with Rs96 million in the same period last year.

Analysts were expecting that the company would report a healthy profit in the second quarter on the back of higher urea margins and higher income.

Urea prices had increased by Rs75 per bag since the government decided to cut gas supplies to fertilizer manufacturers this May. Per-bag rates stood at Rs880 in the local market. Data released by the National Fertilizer Development Authority revealed that off-take of urea during the first five months of 2010 stood at 2.46 million tons compared to 2.43 million tons during the same period last year, showing a nominal increase of about 1.2 per cent year-on-year.

Published in The Express Tribune, July 28^th, 2010.