Karachi: Fauji Fertilizer Bin Qasim Ltd. (FFBL) announced a substantial increase in its third-quarter earnings for CY24, registering a 51% year-over-year rise in profits, significantly surpassing market expectations. The robust earnings come despite a notable decrease in overall revenue, primarily due to a major shift in product off-takes and prices.

According to AKD Securities Limited, FFBL achieved standalone earnings of PKR 8.0 billion for the quarter, up from PKR 5.3 billion in the same period last year, driven by unexpectedly high gross margins and lower costs of goods sold (COGS). The company’s revenue, however, fell by 18% year-over-year to PKR 57.6 billion, down from PKR 70.1 billion, with a sharp 37% drop in DAP (Di-Ammonium Phosphate) off-takes being partially offset by a 98% increase in urea off-takes and substantial price hikes for both products.

Gross margins improved significantly, rising to 24.5% from 14.8% in the corresponding period last year, reflecting the impact of higher urea sales—which command higher margins—and increased prices. The increase in distribution expenses, up 18% year-over-year to PKR 2.9 billion, was linked to higher volumes and regulatory changes, though mitigated by a 10% reduction in POL (Petroleum, Oil, and Lubricants) prices.

Other income for the company also grew by 27% compared to the same period last year, supported by a rise in short-term investments. Meanwhile, finance costs saw a sharp decline of 67%, which the company attributes to reduced debt levels and improved cash flow, minimizing reliance on short-term borrowings.

These results culminated in a cumulative earnings of PKR 18.6 billion for the first nine months of CY24, a dramatic recovery from a net earning of PKR 354 million in the same period last year, which had been heavily impacted by exchange losses.