Fauji Fertilizer’s earnings rise 53%

Increase mainly due to rise in income from non-core business


Our Correspondent April 27, 2017
PHOTO: EXPRESS

KARACHI: Fauji Fertilizer Company’s consolidated profit rose 53% to Rs1.17 billion for the quarter ended March 31, largely due to income from non-core business, according to a bourse filing on Wednesday.

Previously, the fertiliser manufacturer had booked a profit of Rs769 million in the same quarter of last fiscal year.

Earnings per share (EPS) increased to Rs0.92 in the period under review from Rs0.60.

The board of directors recommended an interim cash dividend of Rs1.50 per share. The entitlement will be paid to the shareholders whose names appear in the register of members on June 4.

Separately, the board approved the acquisition of 30% share capital of Thar Energy Limited, subject to the approval from regulatory bodies.

Nevertheless, the company’s share price dropped 2.63%, or Rs2.67, to Rs98.53 with a volume of 3.38 million shares at the Pakistan Stock Exchange.

Non-core income (other income) increased 3.55 times to Rs1.75 billion from Rs493 million in the previous quarter, which supported the consolidated profit. Sales, however, fell 3% to Rs11.56 billion from Rs11.96 billion.

Furthermore, the share of profit from associates and joint ventures declined 2.55 times to Rs283 million from Rs723 million.

Administrative expenses and distribution cost rose to Rs1.75 billion from Rs1.56 billion and finance cost decreased to Rs747 million from Rs806 million.

In post-result comments, Taurus Securities said despite a volumetric increase of 6% in urea off-take, net sales fell 4% on account of low retention prices during the period.

“Gross margins of the fertiliser producer came in at 23.2% (a decline of 296 basis points from 26.2% in the corresponding period) due to decline in retention prices of urea,” it said.

Lower dividend income further reduced the profitability during the quarter.

JS Research in its report said: “We believe that dynamics will improve going forward and inclusion of the stock into the MSCI EM index will serve as near-term catalyst for its movement.”

Published in The Express Tribune, April 27th, 2017.

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