On a Consolidated basis, FFC’s profits surged by an impressive 35% YoY, achieving an all-time high profitability of PKR 20.76 billion (EPS: PKR 15.97) in the 1HCY23, compared to the previous year’s PAT of PKR 15.37 billion (EPS: PKR 11.86). This surge in profitability was primarily a result of enhanced efficiency and strategic cost-cutting measures undertaken amidst significant challenges posed by substantial devaluation and high inflation. A notable boost in other income (PKR 6.84 billion) also contributed substantially to the enhanced net income.
However, in dollar terms, the company’s profitability witnessed a decrease of 8%, amounting to $48 million in the first half of CY23, compared to $52 million in the same period last year.
FFC’s top-line performance displayed remarkable growth, with revenues reaching PKR 82.51 billion, a significant 33% increase YoY, compared to PKR 62.06 billion in the corresponding period. Moreover, the company’s margins showed improvement, rising to 46% in the 1HCY23 from
41.24% in SPLY.
Operating expenses and financial costs experienced an upward movement due to higher inflation and increased borrowing costs, recording a 36% YoY and 33% YoY increase, respectively, during the stated period. From a standalone perspective, FFC reported revenues of PKR 71.96 billion in 1HCY23, compared to PKR 54.71 billion in SPLY. The company’s standalone profitability reached PKR 13.08 billion (EPS: PKR 10.28), marking a 36% YoY increase, compared to PKR 9.59 billion (EPS: PKR 7.55) in SPLY.
During the first six months of this year, FFC demonstrated robust operational efficiency by producing 1,278KT of Sona Urea at a consistent operating efficiency rate of 125%, in line with the previous year’s performance. However, DAP sales remained stagnant at 50KT.
Management highlighted FFC’s achievement of selling urea at a competitively lower price of PKR 2,565 per bag compared to industry and international urea prices (PKR 3,000 per bag and PKR 5,700 per bag, respectively).
Key Challenges faced by FFC include: (1) Gas Price Unification, (2) High Inflation, (3) Elevated Interest Rates, (4) Devaluation, (5) Increased Super Tax, (6) Profitability
Dip in Dollar Terms, (7) Natural Gas Depletion, and (9) Aging Plant Maintenance.
FFC continued to dominate the local urea industry with the highest market share of 40% in the 1HCY23, achieving sales of 1,248KT, while the industry witnessed a 4.5% YoY decline in Urea sales. FFC also held an 11% DAP market share, with FFBL (58%) and Engro (17%) leading the
market in the same period.
Management emphasized that inventory levels are optimized for the coming months. The debt-to-equity ratio stands at 24:76.
Renewable and wind energy projects contributed 142.8GWh of energy to the national grid in 1HCY23. Additionally, Fauji Fresh Freeze witnessed remarkable growth, with sales volume increasing by 51% YoY and revenue growing by 109% YoY.
Looking ahead, FFC’s focus remains on optimizing operations and controlling costs, enabling the company to navigate the upcoming challenges effectively. The company plans to undertake the second plant maintenance activity in the latter half of this year.
Important Disclosures
Disclaimer:
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