Karachi, August 05, 2021 (PPI-OT): FFBL: Takeaways from the Corporate Briefing session

Fauji Fertilizer Bin Qasim Ltd (FFBL) announced its 2QCY21 result last week wherein the company posted an unconsolidated after tax profit of Rs2,609mn (EPS of Rs2.0) for the quarter vis-a-vis loss of Rs1,160mn (LPS of Rs0.9) in 2QCY20. Operating profit clocked in at Rs1,703mn during the quarter, a 347% increase over SPLY. Fauji Fertilizer Bin Qasim Ltd held its corporate briefing session to discuss the latest results and future outlook of the company. We present key takeaways from the session.

Fauji Fertilizers Bin Qasim Limited (FFBL) announced its 2QCY21 results, wherein the company posted an unconsolidated profit of Rs2,609mn (EPS: Rs2.0) against a loss of Rs1,160mn (LPS: Rs0.9) in the corresponding period last year.

A major reason was better DAP margins being earned as the company was able to increase local prices to pass on the input costs during the quarter. Dividend payments to the tune of Rs2.9bn from subsidiaries PMP Morroco, Foundation Wind Energy – I and II and Fauji Power Company Ltd. (FPCL) also helped lift the EPS.

FPCL has been paying dividend in the 3rd quarter for the last two years but management says it has now planned a phased dividend approach by distributing it across quarters as opposed to a bullet payment.

According to the management, proceeds from the sale of its wind power plants (FWE I and II) will be received by the end of 3QCY21, the company plans to utilize these proceeds to lower its finance costs.

The company shared that PMP Morroco is doing better this year as Phosphoric acid prices are up but the impact gets nullified as it is also the primary raw material for FFBL’s core business. At present there are no plans to get Fauji Power Company Limited (FPCL) listed on the stock exchange.

For the DAP segment’s outlook, the company acknowledged that Phosphoric acid prices have increased but hinted that there may not be further price hikes in the coming days as the company already has increased DAP prices by PKR 200/bag last month.

In light of improved farm economics, better support prices and focus of government on the agriculture sector it is evident that the fertilizer sector will continue to be of prime importance.

The management is optimistic that Fauji Foods Ltd (FFL) will post a positive bottom line from next year onward. The company showed a 35% YoY sales growth in the outgoing quarter and gross margin of 13% compared to a gross loss in the SPLY. Company has shown considerable improvement in the last one year under the new management team and also saw launch of some new products.

The management however could not share any specifics on the future outlook for Fauji Meat Ltd and recognized that it’ll take time to turn profitable.