Ayesha Mudassar

Pakistan's fertilizer companies jointly posted a 72% increase in gross profit and a whopping 272% growth in net profit during the first quarter (January-March) of the ongoing calendar year 2024 compared to the corresponding period of 2023, according to WealthPK. In 1QCY24, listed fertilizer firms collectively earned a gross profit of Rs53.01 billion and a net profit of Rs22.9 billion, thus coming up with the gross profit and net profit ratios of 31% and 14%, respectively. The substantial growth was 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 Rs170.2 billion in 1QCY24 from Rs105.1 billion in the same period of CY23, representing an increase of 62%. Engro Fertilizers Limited (EFERT), Fauji Fertilizer Company Limited (FFC), Fatima Fertilizer Company Limited (FATIMA), and Fauji Fertilizer Bin Qasim Limited (FFBL) make up the Pakistan’s fertilizer sector. EFERT with a market capitalisation of Rs211.1 billion leads its peers followed by FFC with a market cap of Rs177.7 billion. FATIMA and FFBL are the third and fourth with market caps of Rs103.1 billion and Rs42.7 billion, respectively.

Quarterly review-1QCY24

During 1QCY24, FATIMA beat its peers by making the highest sales and declaring the highest gross profit. In terms of profitability, FFC posted the highest net profit followed by FATIMA, FFBL and EFERT. FFC posted the highest earnings per share (EPS) followed by EFERT and FATIMA. FFBL stood at fourth position.

FFC posted net sales of Rs58.4 billion and a gross profit of Rs17.2 billion, resulting in a net profit of Rs10.5 billion. Therefore, the gross profit and net profit ratios were calculated at 30% and 18%, respectively. In 1QCY24, FFC reported earnings per share of Rs8.27. FATIMA posted a gross profit of Rs26.9 billion and a net profit of Rs8.1 billion on the net sales of Rs65.2 billion. Therefore, the gross profit and net profit ratios were reported to be 41% and 12%, respectively. During the quarter, the firm reported earnings per share of Rs3.8. FFBL earned the gross and net profits of Rs8.7 billion and Rs4.3 billion, respectively, during 1QCY24. Furthermore, the fertilizer company posted earnings per share of Rs3.33 during the period. In 1QCY24, Engro fertilizers posted net sales of Rs73.7 million, a gross profit of Rs22.5 million, and a net profit of Rs10.7 million. This resulted in gross profit and net profit margins of 31% and 15%, respectively..

Future outlook

The fertilizer industry remains pivotal to the sustainable agricultural growth of the nation. The companies continue to work closely with the relevant authorities to ensure uninterrupted production of urea. To address the decline in gas pressure, the fertilizer producers have agreed with Mari Petroleum Company Limited (MPCL) to invest in the establishment of Pressure Enhancement Facilities (PEF) at MPCL's delivery node. The project is expected to have a significant capital outlay and will ensure sustained gas supplies to fertilizer manufacturers.

Credit: INP-WealthPk