Fauji Fertilizer Bin Qasim Limited (PSX: FFBL) recorded a significant 51% year-on-year (YoY) increase in profit after tax, amounting to Rs8 billion (EPS: Rs6.20) in the third quarter of 2024. This impressive performance was driven by several key factors, most notably improved gas availability and favorable international DAP margins.
Key Drivers of Growth
- Gas Availability Boosts Production: The availability of gas improved to 84% of the allocated amount, compared to 54% in 2023. This allowed FFBL to increase its Urea production by 118% and sales volumes by 98% YoY, reducing the country’s need for Urea imports.
- Strong DAP Margins: International DAP margins remained robust, significantly contributing to FFBL’s financial performance during the period under review.
- Reduced Finance Costs: Finance costs were reduced by Rs1.6 billion compared to the same quarter last year, standing at Rs0.8 billion in Q3 2024 compared to Rs2.4 billion in Q3 2023.
Nine-Month Performance
For the nine months ending September 30, 2024, FFBL posted a profit after tax of Rs18.6 billion, reflecting strong results driven by stable foreign exchange rates and favorable DAP margins. Gas supply increased to 77% of the allocation, up from 56% in the same period last year (SPLY), further supporting production.
- Urea Sales: Urea sales volume rose by 42% YoY, reaching 361,000 tons, up from 254,000 tons in SPLY.
- Lower Finance and Exchange Costs: Finance costs decreased by Rs4.8 billion, and exchange losses were minimized to Rs0.2 billion, down from Rs4.6 billion in the prior year.
Consolidated Results and Contributions
On a consolidated basis, FFBL Group reported a profit after tax of Rs26.4 billion, a substantial increase from Rs0.2 billion in the same period last year. Key contributors to this performance include:
- Joint Venture (PMP): Contributed Rs3.1 billion in profit (2023: Rs1.2 billion loss).
- Associated Company (AKBL): Added Rs3.2 billion (2023: Rs2.6 billion).
Future Outlook and Strategic Initiatives
FFBL highlighted the critical importance of stable gas supply to sustain the fertilizer sector and minimize reliance on Urea imports. The company’s strategic plans focus on optimizing indigenous gas use, enhancing operational efficiencies, and creating stakeholder value.
The proposed merger with Fauji Fertilizer Company (FFC) is expected to unlock further growth opportunities by improving cost management and enhancing shareholder returns. FFBL remains committed to initiatives that will strengthen its financial performance and long-term sustainability.
Q3 2024 Financial Overview:
| Metric | Sep-24 | Sep-23 | % Change |
|---|---|---|---|
| Sales-net | Rs 57.61 billion | Rs 70.07 billion | -17.8% |
| Gross Profit | Rs 14.14 billion | Rs 10.28 billion | 37.5% |
| Finance Costs | Rs 0.77 billion | Rs 2.36 billion | -67.5% |
| Profit After Tax | Rs 8.01 billion | Rs 5.30 billion | 51.0% |
| Earnings per Share (EPS) | Rs 6.20 | Rs 4.10 | 51.2% |
FFBL’s strong Q3 2024 results reflect the company’s ability to navigate challenges and leverage opportunities, positioning it well for future growth.
