FFBL posts Rs8.4 billion loss in 2019

Poor earnings attributed to high taxes, massive losses suffered by subsidiaries


​ Our Correspondent January 30, 2020
A farmer spreads fertiliser in his rice field. PHOTO: REUTERS

KARACHI: Fauji Fertiliser Bin Qasim Limited (FFBL) reported a consolidated loss of around Rs8.4 billion for the year ended December 31, 2019.

The company had reported a net profit of Rs778 million for calendar year 2018.

Accordingly, loss per share of the fertiliser manufacturer stood at Rs6.82 in 2019 compared to earnings per share of Rs1.68 in 2018. For 2019, the company reported net sales of Rs81.5 billion, up 5.11% compared to Rs77.6 billion recorded in the calendar year 2018.

“Earnings turned out to be lower than expected owing to high taxes and massive losses reported by the subsidiaries,” said Topline Securities’ analyst Sunny Kumar. According to the brokerage house, FFBL reported a loss of Rs3.2 billion in the fourth quarter of 2019 compared to a profit of Rs1.3 billion in the same period of 2018.

Loss per share during the quarter came in at Rs2.46 compared to earnings per share of Rs1.39 in the corresponding period of 2018, reported Topline Securities.

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Furthermore, in the fourth quarter of 2019, the company booked taxation expense of Rs2.9 billion compared to a tax credit of Rs86 million in the same period of 2018. “Food business of the company (Fauji Foods) recorded a gross loss of Rs115 million in the fourth quarter, under pressure due to a decline in sales revenue and an increase in the cost of production amidst rupee devaluation against the dollar,” stated the analyst.

He added that in the fertiliser business, gross margins stood at 10% in the last quarter of 2019 against 14% in the corresponding period of 2018 due to a decline in di-ammonium phosphate (DAP) margins.

Kumar said financial cost soared substantially by 86% to Rs3 billion given high interest rates and higher borrowing requirements due to lower cash profitability.

“Key risks to our forecast include higher-than-expected gas prices, adverse decision on gas infrastructure development cess (GIDC) and decline in international DAP margins,” he said. During the day, the company’s stock price declined by Rs0.71 to Rs20.14 with 8.8 million shares changing hands at the Pakistan Stock Exchange.

Published in The Express Tribune, January 30th, 2020.

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