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Karachi: FFBL has reported a remarkable surge in profitability, posting a record profit of PkR18.6 billion in the first nine months of the calendar year 2024, marking a 52-fold increase year-over-year. This significant growth was primarily fueled by higher diammonium phosphate (DAP) margins and increased urea offtakes.
According to AKD Securities Limited, on a consolidated basis, FFBL reported earnings of PkR24.7 billion in 9MCY24, compared to a loss of PkR0.5 billion in the same period last year. The earnings saw a substantial contribution from core operations, accounting for 60%, with FPCL contributing 16%, PMP 11%, AKBL 10%, and FFL 3%. Despite a decline in DAP offtakes by 8% year-over-year, urea sales saw a notable increase of 43% during the period.
The company’s DAP offtakes decreased to 571,000 tons in 9MCY24 from 619,000 tons in the same period last year, attributed to overall market contraction and increased competition from private importers. Consequently, FFBL’s market share for DAP fell to 58% from 62% in the previous year. In contrast, the total DAP market experienced a 5% year-over-year decline to 943,000 tons, driven by deteriorated farm economics. However, DAP primary margins improved, reaching US$156 per ton in the third quarter of 2024 from US$103 per ton in the same period last year.
FFBL’s urea sales rose by 43% year-over-year to 361,000 tons in 9MCY24 from 253,000 tons in the same period last year, benefiting from improved gas availability and no operational turnarounds. This increase boosted FFBL’s urea market share to 8% from 5% previously. The management highlighted receiving 77% of its allotted gas quota compared to 56% in the same period last year.
The closing DAP industry inventory stands at 366,000 tons, a significant increase from 38,000 tons in the same period last year, due to lower demand and higher private imports in the first half of CY24. Currently, FFBL’s inventory is at 83,000 tons. The management also reported the repayment of PkR12 billion in long-term debt during 9MCY24, with the remaining PkR1.2 billion expected to be cleared by year-end, leading to an unlevered balance sheet at the time of the anticipated amalgamation with FFC.
Urea and DAP prices are currently PkR4,430 per bag and PkR11,981 per bag, respectively, with the management expecting price stability in the future. The merger with FFC is expected to complete by the end of CY24, with the next court hearing scheduled for November 18, 2024. Additionally, the company has planned a plant turnaround in early CY25, with the urea plant to be offline for 1-1.5 months and the DAP plant for approximately three weeks.
The management reported that all subsidiaries were profitable in 9MCY24, with stable profitability expected to continue. FPCL reported a 99% dispatch factor in 9MCY24, and the company is currently utilizing a coal mix with 35% low GCF coal.
The post FFBL Achieves Record Profitability of PkR18.6bn in 9MCY24, Driven by Higher DAP Margins and Increased Urea Offtakes. appeared first on Pakistan Business News.