Fatima Fertilizer Reports 18% Rise in Quarterly Profits Despite Sales Decline

Lahore: Fatima Fertilizer Company Ltd. (FATIMA) today announced its third quarter financial results for the year 2024, posting an 18% increase in consolidated earnings, despite a significant drop in sales volumes and revenues. The company recorded earnings of PkR9.2 billion, or earnings per share (EPS) of PkR4.4, compared to PkR7.8 billion or PkR3.7 EPS in the same period last year.

According to AKD Securities Limited, Fatima Fertilizer’s total sales for the quarter amounted to PkR62.6 billion, down 18% from PkR76.2 billion in the same period last year. This decline was primarily attributed to a dramatic decrease in sales volumes for CAN and NP fertilizers, which fell by 63% and 59% year-over-year, respectively, despite price increases for end-products. Conversely, urea offtakes showed a modest increase of 4% year-over-year.

The company experienced improved gross margins, which rose to 33.7% from 29.7% in the third quarter of 2023. This improvement was due to higher primary margins on urea production from the DH and Pakarab plants, benefitting from a narrowing gas price differential compared to its peers, and a decrease in phosphate rock prices, which fell to US$153 per ton from US$345 per ton in the same period last year.

Further contributing to the financial improvements, distribution expenses decreased by 7% year-over-year to PkR3.5 billion, in line with the reduced sales volume. Additionally, other income saw a significant increase of 43% to PkR2.1 billion, thanks to a 54% increase in cash and investments during the period. Finance costs also decreased by 9% to PkR960 million, mainly due to reduced borrowings. Notably, the company lowered its borrowings to PkR23.0 billion as of June 2024, down from PkR30.2 billion at the end of June 2023.

Overall, the company’s earnings for the first nine months of 2024 reached PkR10.8 per share, a substantial 75% increase from PkR6.2 per share in the same period last year.

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