Ayesha Mudassar

Fauji Fertilizer Company Limited (FFC) posted a 60% growth in revenues, 19% in gross profit and 36% in net profit in the first three months of the ongoing calendar year 2024 compared to the same period of 2023, reports WealthPK. FFC recorded sales of Rs58.4 billion, a gross profit of Rs17.2 billion and a net profit of Rs10.5 billion in 3MCY24. The company posted gross profit and net profit ratios of 30% and 18%, respectively, during the months under review.

In addition, the earnings per share (EPS) for the period were recorded at Rs8.27, reflecting a growth rate of 36% compared to Rs6.08 in 3MCY23. This rise reflects the effective utilization of profits to benefit shareholders.

Pattern of shareholding

As of December 31, 2023, FFC had a total of 1,272.2 million shares outstanding, which were held by 15,478 shareholders. Associated companies, undertakings, and related parties had the largest stake of 44.3% in FFC followed by the local general public holding 24% of the shares. Public sector companies and corporations accounted for 11.6% of the shares of FFC, while banks, DFIs, NBFIs, insurance companies, takaful, modarabas, and pension funds collectively held 7.3% of shares. Around 3.4% of shares were held by foreign companies.

Six years analysis (2018-2023)

Statement of profit or loss

The company surpassed Rs150 billion mark in the net turnover for the first time in the past six years, reaching its highest-ever turnover of Rs159.4 billion in 2023. This represents an annual average growth of 10% since 2018, primarily attributed to increased sales and higher selling prices. Correspondingly, the cost of sales also experienced an average annual escalation of 5% since 2018, largely driven by higher raw material prices and inflationary pressures. The efficient resource management, cost economization, and the favourable trajectory of fertilizer prices collectively led to elevated gross profit over the preceding six years. This progression witnessed a surge from Rs27.9 billion in 2018 to an impressive Rs64.2 billion in 2023, representing an annual growth rate of 20%.

Prudent cost control measures effectively restrained the escalation of distribution costs until 2021. However, the adverse economic conditions and geopolitical turmoil led to a substantial rise in cost in subsequent years. Consequently, distribution costs surged by 20% in 2022 and 25% in 2023 compared to the respective preceding years. The operating profit increased from Rs19.1 billion in 2018 to a notable Rs51.5 billion in 2023. The company demonstrated robust growth in net profitability, maintaining an impressive average annual growth of 17% since 2018. The year 2023 proved favourable as the company achieved a notable net profit of Rs29.6 billion. This achievement can be predominantly attributed to the highest-ever turnover and record investment income.

Summary of cashflows

The net cash generated from operations was recorded at Rs60.8 billion in 2023, which was Rs38.01 billion higher than in 2018. This was mainly due to increased profitability and liquidation of inventory. To ensure sustained operations and business continuity, the company continued its strategic investment in capital projects, and hence, net cash used in investing activities stood at Rs5.8 billion in 2023 compared to a cash generation of Rs1.1 billion in 2018.

Furthermore, the net cash utilized in financing activities amounted to Rs15.9 billion in 2023, slightly lower than Rs16.4 billion in 2018.

Company description

Fauji Fertilizer Company is a public company incorporated in Pakistan under the Companies Act, 1913, (now the Companies Act, 2017). The company is engaged in the manufacturing, purchasing, and marketing of fertilizers and chemicals. The company also undertakes investments in other fertilizer, chemicals, cement, food processing, energy generation, and banking operations.

Credit: INP-WealthPk