Karachi, July 25, 2023 (PPI-OT): FFC: 2QCY23 Result Review
FFC announced its 2QCY23 results wherein, they posted profit after tax of PkR5.3bn (EPS: PkR4.2/sh) vs. PkR3.4bn (EPS: PkR2.6/sh) in the SPLY, depicting an increase of 59.1%YoY. On a QoQ basis, the company has recorded a decline in the bottom line of 30.8% mainly owing to i) increased tax charge, ii) lower other income, and iii) higher other expenses. On a cumulative basis, the company has managed some earnings increase of 36.2% in the 1HCY23 against the SPLY owing to strong pricing power amidst the lowest Industry wide gas cost. Furthermore, the company has announced a PkR3.15/sh interim payout, in addition to PkR4.26/sh paid out in the 1QCY23.
The company managed to post a topline of PkR36bn during the quarter under review (?2.3%/?25.2% QoQ/YoY) combined with lower COGS, taking the gross margin to a rich 46.8% in contrast to 1QCY23 margins of 40.0% and 40.7% in 2QCY22. This remains due to the company benefitting from an unchanged gas cost (Mari network cost at PkR302/mmbtu remaining unchanged in the notification shared at the start of the year), and timely increases in urea prices.
Other income clocked in lower at PkR2.8bn, ?22.4%/30.4% QoQ/YoY due to declining short term investments as was witnessed in 1QCY23 and a possible non-payment of dividends by Group companies. Finance cost has expectedly come in strong at PkR1.2bn owing to record high interest rates.
Distribution cost and other expenses have clocked in higher by 26.5% and 29.4% on a yearly basis, respectively, owing to inflationary pressures.
The major dent in earnings despite strong margins came from the increase in taxation, effectively coming in at 61.0% due to the imposition of a 10% super tax in addition to the corporate tax rate.