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AKD Securities Limited – Off the Analyst’s Desk (January 30, 2023)

Karachi, January 30, 2023 (PPI-OT): FFBL: CY22 Result Review

Fauji Fertilizer Bin Qasim Limited (FFBL) announced CY22 result today, where it posted earnings on the unconsolidated level of PkR2.3bn for the year, culminating into an EPS of PkR1.8. For the final quarter of the year, a NPAT of PkR614mn (EPS: PkR0.5) was posted, lower than the industry expectations. On the consolidated basis, earnings for the year amounted to PkR7.6bn, taking total earnings per share to PkR5.9 in CY22.

Net sales for the company have clocked in at PkR65.7bn for the final quarter of the year, up by 56%YoY and 191%QoQ, boosted by the surge in DAP offtakes in the quarter along with higher prices. This takes total unconsolidated revenue for CY22 to PkR159.2bn, up by 44%YoY despite the lower DAP offtakes owing to the surge in prices of DAP in the year.

FFBL has posted margins of 16% in CY22, considerably lower compared to the 20% of CY21 as the higher power costs along with the pricier inventory of phosphoric acid made a dent on the company’s costs. Owing to this, margins in 4QCY22 clocked in at merely 12% vs. 17% in the third quarter of the year.

Owing to heightened ST borrowings, financial charges for the company have clocked in at a whopping PkR2.6bn. Amid the high interest rate environment, the company is bearing the brunt of the higher borrowings. Other Income for the company have increased by 5%QoQ to clock in at PkR1.0bn as ST investments boost earnings.

Earnings for the year have decreased by 64%YoY, further dented by the imposition of Supertax in the year, with the ETR clocking in at 73%. Furthermore, the company has not announced a dividend for the fourth year in a row.

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