Fauji Fertilizer Reports Substantial Profit Increase in Third Quarter, Defers Dividend Amid Merger

Islamabad: Fauji Fertilizer Company Ltd. (FFC) has reported a significant 80% year-over-year increase in standalone profit for the third quarter of 2024, with earnings reaching PkR16.5 billion compared to PkR9.1 billion in the same period last year. Despite these robust earnings, FFC did not declare the anticipated cash dividend due to its ongoing merger process with FFBL.

According to AKD Securities Limited, FFC’s sales rose by 14% year-over-year to PkR50.3 billion in 3QCY24, driven by a substantial 45% increase in urea prices to PkR4,400 per bag. This price rise comes despite a 12% decline in urea off takes during the quarter. The significant improvement in gross margins to 51.8%, up from 30.9% in the same period last year, was primarily due to the rise in urea prices coupled with relatively lower gas costs, which remained about 53% cheaper than those of peers on the Sui Network.

The report also highlighted a 79% increase in distribution expenses to PkR5.3 billion, largely attributable to higher transportation costs following new axle load regulations. Meanwhile, other income for the company surged by 46% year-over-year to PkR9.1 billion, boosted by an approximately 1.6-fold increase in short-term investments, despite declining yields.

Finance costs for FFC remained flat year-over-year at PkR1.3 billion, as increased borrowing was balanced by a decline in KIBOR rates. For the first nine months of 2024, FFC’s earnings accumulated to PkR42.5 billion, marking a 92% increase from PkR22.2 billion in the same period of the previous year, mainly due to higher gross margins and increased other income.

Despite these strong financial results, FFC has paused dividend distributions due to its ongoing merger with FFBL, with management expressing intentions to resume its regular payout trend upon completion of the amalgamation process.

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