Karachi: Fatima Fertilizer Company Ltd. (FATIMA) today announced a significant rise in its second-quarter earnings for 2024, with profits surging by approximately 4.4 times compared to the same period last year, driven by improved gross margins and increased other income.

According to AKD Securities Limited, FATIMA’s earnings for the second quarter stood at PKR 5.2 billion, with an earnings per share (EPS) of PKR 2.5, compared to PKR 1.2 billion and an EPS of PKR 0.57 in the same period last year. This increase was primarily due to higher gross margins, which climbed to 38.2% from 31.0%, and a notable rise in other income, which increased 3.3 times year-over-year to PKR 2.1 billion. The absence of a super tax impact from the same period last year also contributed to the earnings growth.

The company reported a 10% year-over-year decline in topline revenue, which totaled PKR 42.3 billion, down from PKR 47.2 billion, mainly due to decreased sales volumes across various products, including Urea, CAN, NP, and DAP, despite higher end-product prices.

Operating expenses for the quarter rose to PKR 7.2 billion, up 57% from PKR 4.6 billion in the same period last year, driven by higher distribution and administrative costs due to axle load regulations and inflationary pressures. However, finance costs decreased by 48% to PKR 810 million, down from PKR 1.6 billion, as the company significantly reduced its borrowings to PKR 8.1 billion from PKR 17.4 billion a year earlier.

Fatima Fertilizer also declared a half-yearly dividend of PKR 2.75 per share, aligning closely with market expectations. For the first half of 2024, the company’s accumulated earnings were PKR 6.47 per share, up from PKR 2.49 per share in the same period last year.

With these results, AKD Securities maintains a ‘Buy’ stance on FATIMA, projecting a target price of PKR 61 per share by June 2025, which represents a potential capital appreciation of 17% along with a dividend yield of 12% for the calendar year 2024.