Ayesha Mudassar

Fatima Fertilizer Company Limited (FATIMA) recorded an increase of 110% year-on-year (YoY) in its profitability in the first quarter of the ongoing calendar year 2024, earning a net profit of Rs8.1 billion compared to a profit of Rs3.8 billion in the corresponding quarter of earlier calendar, according to WealthPk.

Going by the company's unconsolidated results, the net sales expanded by 75% YoY to Rs65.2 billion compared to Rs37.2 billion in 1QCY23. Although the cost of sales increased by 65% year-on-year, it rose at a slower rate than the increase in sales. This resulted in a 92% jump in gross profit, reaching Rs26.9 billion in 1QCY24. In addition, other income rose by a gigantic 397% YoY to reach Rs2.3 billion in 1QCY24 compared to Rs463.6 million in 1QCY23. On the expense side, the company's administrative and distribution costs rose 35% and 36%, respectively, during the quarter under review. Furthermore, the operating expenses increased 173% YoY to Rs5.8 billion in 1QCY24. The company’s finance cost marked a decline of 36% YoY and stood at Rs737.8 million compared to Rs1.1 billion in 1QCY23. On the tax front, the FATIMA paid a higher tax worth Rs7.7 billion against the Rs2.7 billion paid in the corresponding period of last year, depicting an increase of 180% YoY.

Sectoral Financials- 1QCY24

Pakistan's fertilizer companies jointly posted 81% increase in gross profit, and 172% growth in net profit during 1QCY24 compared to the corresponding period of 2023. In 1QCY24, listed fertilizers firms collectively earned a gross profit of Rs71.2 billion and a net profit of Rs31.7 billion, thus coming up with the gross profit and net profit ratio of 31% and 14%, respectively. The substantial growth is primarily driven by higher production and sales volume of urea and diammonium phosphate (DAP) fertilizers.

As per the results available with WealthPk, the fertilizer sector’s net sales increased to Rs223.9 billion in 1QCY24 from Rs138.4 billion in the same period of CY23, representing an increase of 62%. The fertilizer sector includes; Engro Fertilizers Limited (EFERT), Fauji Fertilizers Company Limited (FFC), Fatima Fertilizer Company Limited (FATIMA), and Fauji Fertilizer Bin Qasim Limited (FFBL).

Fertilizer Companies- Quarterly Review-1QCY24

During 1QCY24, FATIMA beat its peers by making the highest sales and declaring the highest gross profit. The company posted a gross profit of Rs26.9 on the net sales of Rs65.2 billion. Therefore, the gross profit was reported to be 41% during the quarter. Enhanced operational efficiencies gained with consistent plant operations helped the company to deliver improved performance over the period.

About the company

Fatima Fertilizer Company Limited was incorporated in Pakistan on December 24, 2003, as a public company under the repealed Companies Ordinance, 1984 (now Companies Act, 2017). The principal activity of the company is manufacturing, producing, buying, selling, importing, and exporting fertilizers and chemicals.

Future Outlook

The fertilizer industry remains pivotal to the sustainable agricultural growth of the nation. The company continues to work closely with the industry and the Government of Pakistan (GOP) to ensure uninterrupted production of urea. To address the decline in gas pressure, FATIMA and other fertilizer producers have agreed with Mari Petroleum Company Limited (MPCL) to invest in Pressure Enhancement Facilities (PEF) at MPCL’s delivery node. The project is expected to have a significant capital outlay and ensure sustained gas supplies to fertilizer manufacturers.

Credit: INP-WealthPk