Karachi, July 26, 2022 (PPI-OT): FFBL: 2QCY22 Review – Above expectation

Fauji Fertilizer Bin Qasim Limited (FFBL) announced its 2QCY22 result, where it posted unconsolidated PAT of PkR1.7bn (EPS: PkR1.38), down 32%YoY. This takes cumulative 1HCY22 PAT to PkR3.4bn (EPS: PkR2.64) vs PAT of PkR3.8bn (EPS: PkR3.0) in same period last year. The result is above our expectation due to higher other income and higher volumetric sales.

Company posted topline of PkR46.1bn vs PkR16.9bn in SPLY, depicting an increase of ~173%. The primary reason for higher sales is attributable to higher realized DAP prices and ~50% increase in DAP volumetric sales. On QoQ basis, topline recorded a growth of ~86%, on the back of higher volumetric sale and fertilizer prices.

Gross margins clocked in at ~19% during 2QCY22, down by 270bps on QoQ basis, attributable to higher phosacid prices (up by 9% QoQ).

Finance cost witnessed a jump of 49%/28% on YoY/QoQ basis, amid rising financing cost.

Other income clocked in at PkR3.2bn, up by 31%/191% YoY/QoQ. The increase is mainly attributable to dividend from PMP.

Other expenses for 2QCY22, clocked in at PkR2.9bn, vs PkR0.94bn in 1QCY22. The significant jump in other charges is due to exchange loss on account of trade payables.

Effective tax rate for the quarter clocked in at ~71%, attributable to imposition of super tax and poverty alleviation tax announced in federal budget. As per management, company has recorded super tax of PkR2.7bn in Jun’22.