The company announced a cash dividend of Rs4.1 per share for the last quarter, bringing the total payout for the nine month period to Rs11.35. PHOTO: FILE
The company announced a cash dividend of Rs4.1 per share for the last quarter, bringing the total payout for the nine month period to Rs11.35.
Net sales for the nine month period were at Rs52.5 billion, up 5% from Rs50 billion last year. Sales were pushed along by an 11% increase in urea offtakes to 1.79 million tonnes year on year for the nine month period, and a 8% year on year increase in urea prices, despite a 2% drop in offtakes on a quarter on quarter basis, according to Global Securities Pakistan.
Urea demand for the nine month period remained upbeat on expectations of higher prices post gas-price rationalisation which also kept prices up.
The company also witnessed a 28% fall in finance cost down to Rs584 million for the nine month period, from Rs816 million in the previous year.
Other income for the company increased by 21% from Rs2.8 billion last year to Rs3.4 billion this year, mainly due to dividend payout from its subsidiaries. FFC received dividend payments from Fauji Fertilizer Bin Qasim Limited (FFBL) and Fauji Cement Company Limited (FCCL), two subsidiaries of the Fauji group, in the last quarter. FFBL has also announced a dividend payout this quarter. However, FCCL has not announced any dividend, which will show in FFC’s financial results for the fourth quarter.
The company’s results were mostly in line with investors expectations, with little to surprise anyone aside from the higher dividend payout. The biggest source of concern for the company at the moment is the impending gas price rationalisation which will invariably push costs and retail prices up. However the fertiliser industry as a whole is limited in its ability to pass on price to consumers, as it has to sell below the international price.
Coupled with gas shortages, investors have been expecting price hikes for quite a while, which has resulted in growth offtakes as buyers stock up on fertiliser at the current price. To be able to maintain profit rates, the fertiliser industry has been urged to improve efficiencies, which may be linked to gas allocation in the future.
Published in The Express Tribune, October 31st, 2013.
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I have not made a single comment on Pakistani Fauj, please make the correction. As per my information, no raw material is imported for manufacturing urea, hence its price could not be linked with US dollar. About four years back, Govt. of Pakistan carried out a study through independent consultants who reported that Pakistani urea industry is earning significantly higher profit than international competitors. Now when the price of urea is more than double one can imagine the difference between the profit earned by local and world urea manufacturers. Number of bonuses given by the leading local urea industry to its employees in last couple of years also support my comments. We should accept the reality with braveness and courage.
I have not made a single comment on Fauj of the Country, please make the correction. None of the raw material used in urea manufacturing is imported, hence, price is not linked to US dollar. As far as cost of production of urea is concerned, it is among the lowest in the world in Pakistan. About 3-4 years back the Govt. of Pakistan carried out a study through independent consultants who concluded that urea industry of Pakistan is enjoying higher profit than international competitors. Now when the local prices are more than double, one can imagine the difference of profit being earned by the local and world urea industry. Number of bonuses given by FFC to its employees in last couple of years also support my comments. We must accept the reality.
What makes you think that they are making unjustified profits? Fertilizer companies pay taxes on profits they make. You need to understand that some business have huge gross profits and some have very meager. FFC is not enjoying profits only due profit margins. It also enjoy dividend income from few investments. Fertilizer companies are selling urea lower than international prices. When we import / export we are subject to international prices. Kindly note that Agriculture industry makes huge profits, its just that fertilizers are paying taxes whereas the lan lords of PPP, PML(N), PML(Q), PML(F) etc are enjoying income without tax. Go after them and not our brave Fauj.
After tax profit of Rs. 14.8 billion earned by FFC clearly reveals that the farmers of the country are being looted by the fertilizer industry mafia. Prices of urea have been doubled by this cartelized industry during last two years whereas the price of raw material for urea has not increased during the same period. It is an established fact that urea manufacturers in Pakistan have been making 30-40 percent more profit as compared to their international competitors. It is also pity that the governments in Pakistan have never put hands on urea industry for the reasons best known to politicians and bureaucracy. Competition Commission of Pakistan had take certain steps in the past, however, some unidentified hands intervened and refrained it from the actions to be taken to safeguard the public interest.