Fatima Fertilizer’s 2016 profit down 57%

EPS decreases to Rs4.47 compared with Rs10.88 in 2015

KARACHI: Fatima Fertilizer has announced a consolidated profit after tax of Rs9.39 billion in the year ended December 31, 2016, down 57% compared with Rs22.84 billion in the previous year, according to a company notice sent to the Pakistan Stock Exchange (PSX).

Earnings per share (EPS) came down to Rs4.47 compared with an EPS of Rs10.88.

Topline Securities reported that the earnings were in line with expectations, but final cash dividend of Rs2 per share came as a surprise. The announcement of cash dividend took full year payout to Rs3.25 per share (payout ratio 73%).

During the fourth quarter of 2016, the company registered 51% year-on-year sales growth on the back of higher off-take. However, margins went down slightly by 1 percentage points, due to lower retention prices. Gross profit margin stood at 39% compared with 40% last year.

The distribution costs grew 17% year-on-year to Rs1.1 billion, given aggressive marketing and dealer incentive schemes during the period.

The finance cost spiked 33% to Rs978 million likely due to higher borrowings to finance delayed subsidy disbursement, while lower effective tax rate of 14.7% compared with 21.6% supported the bottom line.

During 2016, consolidated revenues of Fatima posted 31% growth, while gross margins declined by 10 percentage points to 45% due to a substantial fall in urea retention prices.

The short lived ramifications of the subsidy, unanticipated increase in gas tariff, and lack of improving agronomics are key risks for the company, the report added.

Published in The Express Tribune, March 18^th, 2017.

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