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FFC profit down 7pc - Published by Daily Dawn


FFC profit down 7pc

From the Newspaper |  | 24th January, 2013

KARACHI, Jan 23: The Fauji Fertiliser Company (FFC) announced results for the year ended Dec 31, 2012 on Wednesday posting profit after tax (PAT) at Rs20.84 billion, translating into earning per share (eps) at Rs16.4, down 7 per cent from PAT at Rs22.49 billion and eps at Rs17.7 the previous year.
The board recommended final cash dividend at Rs5 per share, taking the full year payout at Rs15.50 per share. Analysts said that the earnings were mainly in line with expectations. However, some brokerages and investors who were expecting a bonus issue tied to the cash dividend, were disappointed.
The share in FFC lost Rs1.77 to Rs118.59 at the KSE on a volume of 3.4 million shares.
Topline Research stated the company’s revenue grew by 34pc to Rs74.3bn, primarily on the back of higher urea prices as the volumetric sales declined by 1pc. However, higher increase in the cost of goods sold put pressure on the company’s gross margin, which shrank to 48pc in 2012 as against 62pc last year.
Also, the higher distribution costs (up by 27pc to Rs5.5bn) and lower dividend from subsidiary, Fauji Fertiliser Bin Qasim (FFBL) also restricted bottom-line of the company.
Alone in fourth quarter (4Q2012), FFC posted eps of Rs5.50 against eps of Rs6.80, down 8pc from the same quarter last year but it surged 103pc over the earlier quarter.
Muhammad Sarfraz Abbasi, analyst at brokerage, SummitCapital stated that there were four key factors which were drag on earnings: Massive increase in cost of sales; substantial increase in distribution cost; heavy upsurge in financial costs and steep decline in ‘other income’.
The company reported 35pc YoY higher sales to Rs74.32bn as against the sales of Rs55.22bn in CY11. Growth in sales was attributed to the slightly better urea prices as well as the sale of imported DAP on improved prices which helped in terms of increase in revenue in a situation when its urea offtake was substantially lower.
Tahir Abbas, analyst at Arif Habib Securities stated that net revenue of the company jumped by 35pc YoY to PKR 74bn in CY12.
This growth is mainly on account of higher Urea prices, showing increase of 17pc YoY during CY12, which undermines the absence of any volumetric growth. FFC’s urea offtake was estimated at 2,423 thousand tons in CY12 versus 2,403 thousand tons in the last year, a meager increase of 1pc YoY.
Ayub Ansari, Analyst at AKD Securities observed that factors contributing to the sequential earnings increase in the 4Q2012 were: growth of 75 per cent quarter-on-quarter (QoQ) in revenues on sharp rebound in urea sales and 55%QoQ rise in ‘Other Income’ owing to dividend income from subsidiary FFB
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Source: http://dawn.com/2013/01/24/ffc-profit-down-7pc/ 

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