Islamabad, The profitability of major Pakistani fertilizer companies is projected to improve in the first quarter of 2024, despite facing challenges such as increased gas rates and price adjustments. This growth is attributed to higher retention prices which helped offset the impact of higher costs.

According to JS Global, Fauji Fertilizer Company Limited (FFC), Engro Fertilizers (EFERT), and Fauji Fertilizer Bin Qasim (FFBL) are all expected to report better profitability compared to the same period last year. The forecasted increase comes despite the companies having to navigate delayed price adjustments in response to increased gas rates and selling imported urea, which affected profit margins. Specifically, FFBL is predicted to show significant profitability growth, benefiting from higher sales volumes, no foreign exchange losses, and expanded margins.

For the first quarter of 2024, FFC is anticipated to report earnings per share (EPS) of Rs 8.5, a 40% increase year-over-year, driven by lower gas costs relative to its competitors and additional income from dividends. EFERT is expected to see its EPS rise by 52% to Rs 5.0, having adjusted its gas costs in line with recent rate revisions by SNGPL for gas charges since February 2024. Meanwhile, FFBL is projected to reverse its previous losses, posting an EPS of Rs 3.0 compared to a loss in the same quarter last year, thanks to the highest sales volumes in seven years and improved cost efficiencies.

The report also highlights potential risks, including the possibility of higher fuel and power costs which could affect the forecasted margin improvements. No dividends are expected to be announced by FFBL along with its quarterly results.

JS Global maintains a rigorous analytical approach in its forecasts, emphasizing that while the companies are on a positive trajectory, they continue to face market and operational risks that could impact their financial outcomes.