FFBL profit dives 96% to Rs229m

In 2015, the company had earned Rs5.1 billion

KARACHI: Fauji Fertilizer Bin Qasim Limited (FFBL), the producer of di-ammonium phosphate, has posted a consolidated net profit of Rs229 million for the full year ended December 31, 2016, down 96% from Rs5.1 billion in the previous year, according to a company notice sent to the Pakistan Stock Exchange (PSX) on Monday.

Earnings per share (EPS) of the company dropped to Rs0.24 in 2016 compared to Rs5.47 a year earlier.

JS Research commented that the earnings were below street expectations. The company also announced a final cash dividend of Rs0.5 per share.

FFBL share price closed at Rs52.06, down 5% on a day when the benchmark KSE 100-share Index fell heavily by 991 points, or 1.98%, and closed at 48,972.



During the year, FFBL’s topline dropped 14% year on year, despite a higher sales volume due to lower retention prices. Gross margins nosedived from 14% in 2015 to 3% in 2016.

Other income, however, registered a growth of 54% year on year on account of subsidy collection.

Effective tax rate for the company remained on the lower side as it was 16% in 2016 compared with 25% in the previous year.

In the fourth quarter (Oct-Dec) alone, FFBL’s earnings fell 84% to Rs586 million compared to the profit of Rs3.648 billion in the same quarter of previous year.

The company registered a year-on-year decline of 3% in the top-line for the fourth quarter to Rs26.674 billion despite an uptick in urea and DAP off-take, which increased 9% and 12% year on year, respectively.

The pressure on urea and DAP prices driven by low prevailing rates in the domestic market kept net revenues of the company in check, said Topline Securities in a research note.



Resultantly, gross margins dropped to 3% in 4QCY16 versus 9% in 4QCY15. The margins remained under pressure despite a 13% year-on-year dip in phosphoric acid prices, a raw material for DAP.

Finance cost doubled from Rs484 million to Rs810 million owing to an increase in long-term borrowings for financing projects, increased working capital requirement and delay in subsidy receivables.