Fauji Fertiliser’s profit rises 43% to Rs16.4b
Higher urea prices, increase in DAP margins aid earnings growth
Fauji Fertilizer plant. PHOTO: FAUJI FERTILIZER
KARACHI:
Fauji Fertiliser Company’s (FFC) net profit rose 43% and amounted to Rs16.4 billion for the year ended December 31, 2018, according to a notice sent to the PSX.
The fertiliser producer had announced a profit of Rs11.5 billion in 2017.
Earnings per share (EPS) of the company amounted to Rs12.92 in 2018 compared with Rs9.04 in 2017. The company’s stock price rose Rs1.25 and closed at Rs106.78 with trading in 1.5 million shares on Thursday. For the day, the PSX closed at 40,799.53 points with an increase of 192.41 points in the KSE-100 index.
“FFC has beaten market consensus by posting a profit,” said Shankar Talreja, analyst at Topline Securities. “The earnings resulted mainly due to higher urea retention prices (+21% year-on-year net of subsidy) in fourth quarter of 2018 coupled with higher margins on DAP (di-ammonium phosphate) off-take.
“FFC was holding DAP inventory of 264,000 tons at the beginning of the fourth quarter after which DAP prices swelled Rs200-250 per bag amidst rupee devaluation in October and December 2018.” Gross margins from core operations (fertiliser) at 28% were only 20 basis points higher than market estimates of 27.8%.
Earnings deviated from the estimates due to relatively higher income from associated companies and increase in other income, Talreja said.
Net sales of FFC rose 7% despite 18% year-on-year drop in urea sales in fourth quarter of 2018 as urea and DAP prices swelled 25% and 30% respectively. On a year-on-year basis, finance cost fell 9% to Rs588 million in the fourth quarter due to lower borrowing amidst availability of cash flow from the accrual of GIDC.
Published in The Express Tribune, February 1st, 2019.
Fauji Fertiliser Company’s (FFC) net profit rose 43% and amounted to Rs16.4 billion for the year ended December 31, 2018, according to a notice sent to the PSX.
The fertiliser producer had announced a profit of Rs11.5 billion in 2017.
Earnings per share (EPS) of the company amounted to Rs12.92 in 2018 compared with Rs9.04 in 2017. The company’s stock price rose Rs1.25 and closed at Rs106.78 with trading in 1.5 million shares on Thursday. For the day, the PSX closed at 40,799.53 points with an increase of 192.41 points in the KSE-100 index.
“FFC has beaten market consensus by posting a profit,” said Shankar Talreja, analyst at Topline Securities. “The earnings resulted mainly due to higher urea retention prices (+21% year-on-year net of subsidy) in fourth quarter of 2018 coupled with higher margins on DAP (di-ammonium phosphate) off-take.
“FFC was holding DAP inventory of 264,000 tons at the beginning of the fourth quarter after which DAP prices swelled Rs200-250 per bag amidst rupee devaluation in October and December 2018.” Gross margins from core operations (fertiliser) at 28% were only 20 basis points higher than market estimates of 27.8%.
Earnings deviated from the estimates due to relatively higher income from associated companies and increase in other income, Talreja said.
Net sales of FFC rose 7% despite 18% year-on-year drop in urea sales in fourth quarter of 2018 as urea and DAP prices swelled 25% and 30% respectively. On a year-on-year basis, finance cost fell 9% to Rs588 million in the fourth quarter due to lower borrowing amidst availability of cash flow from the accrual of GIDC.
Published in The Express Tribune, February 1st, 2019.