FFC – earnings depict consistency amidst the pandemic

  • Fauji Fertilizers Company (FFC) announced its financial results earlier today, posting earnings of PKR 4,874mn (EPS: PKR 3.83) during 2QCY20 compared to PKR 5,209mn (EPS: PKR 4.09) recorded during 2QCY19, a fall of 6% YoY. On a cumulative basis, FFC’s earnings rose by 3% YoY to PKR 9,136mn (EPS: PKR 7.18) during 1HCY20. Along with the result, the company announced an interim cash dividend of PKR 2.75/sh, taking cumulative payout to PKR 5.25/sh during 1HCY20.
  • FFC’s revenues grew by 12% QoQ to PKR 23,156mn during 2QCY20 likely due higher urea off-take, which grew by ~16% QoQ to 0.69kT.
  • The company’s margins inched by 2pps to 34% during 1HCY20 likely due to higher urea prices. On a sequential basis, however, margins dipped by 4pps to 32% likely due to reduction in urea prices and a higher cost of inventory.
  • Financial charges declined by 31% YoY to PKR 462mn likely due to lower effective interest rates and a likely reduction in outstanding debt balance.
  • Other income for the company rose by 16% QoQ to PKR 2,287mn largely on account of dividend and treasury income from its investments.
  • Onwards, we expect the company’s urea sales to benefit from the agricultural package and in turn, enhance its profitability and payouts for the remainder of CY20.
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KASB Research

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