FLASHNEWS:

FFC Reports Record Earnings, Announces Highest Quarterly Dividend

Karachi: Fauji Fertilizer Company Ltd. (FFC) has posted significant gains in its 2QCY24 financial results, revealing a substantial increase in earnings and announcing the highest quarterly dividend payout in the company's history. The results indicate robust growth driven by heightened sales, improved gross margins, and increased other income.

According to AKD Securities Limited, FFC's earnings for the second quarter stood at PKR 15.5 billion, a 2.9-fold increase from the PKR 5.3 billion reported in the same period last year. This performance was largely in line with expectations. The company also declared an interim dividend of PKR 10 per share, contributing to a half-year dividend of PKR 15.5 per share, which marks a payout ratio of 76%.

The sharp rise in earnings was primarily fueled by a 61% year-over-year increase in sales, which reached PKR 57.2 billion. This surge was due to an 80% rise in average urea prices and a 27% increase in DAP prices, alongside a 57% increase in DAP offtakes. Additionally, the company benefited from a significant expansion in gross margins, which jumped to 54.5% from 46.8% in the previous year, due to the price hikes surpassing the impacts of gas price revisions.

Operational expenses also rose, with distribution expenses doubling due to higher transportation costs and increased volumes. However, other income for the company doubled to PKR 5.5 billion, driven by dividend income and higher short-term investment returns.

Overall, the first half of CY24 saw FFC accumulating earnings of PKR 26.1 billion, a notable rise from the PKR 13.1 billion recorded in the previous year. AKD Securities maintains a 'BUY' stance on FFC, with a target price set for June 2025 at PKR 190 per share, anticipating a dividend yield of 18% for CY25.