Islamabad July 25 2024: Fauji Fertilizer Bin Qasim Limited (FFBL) reported profit of PKR 10.6 billion during the period ending June 30, 2024, the highest in company’s history for first six months, showing significant improvements across various metrics.
Economic stability, characterized by a steady foreign exchange rate, higher international DAP margins, and improved gas availability, played a crucial role in FFBL’s performance.
Company DAP sales increased to 351 KT (including 24 KT of imported DAP) compared to 274 KT in 2023. Urea sales rose to 216 KT from 180 KT in the same period last year.
“Improved efficiency in the second quarter contributed to higher production levels” states management.
As a result, FFBL achieved a record half-yearly profit after tax (PAT) of PKR 10.6 billion, a substantial turnaround from a loss of PKR 4.9 billion in the same period last year. The second quarter PAT was PKR 6.2 billion, up from PKR 0.4 billion in the same quarter of the previous year.
“Thanks to the support from the Government of Pakistan, FFBL managed to secure better gas supply during the review period. The gas supply improved to 74% of the allocated volume, compared to 53% in the same period last year, which boosted the production of Urea and DAP’ states management.
Proactive working capital management led to a significant reduction in finance costs to PKR 2.1 billion for the six months, down from PKR 5.3 billion in 2023. The second quarter finance costs were PKR 1.1 billion, compared to PKR 2.8 billion last year. Additionally, bank deposit income increased by PKR 3.9 billion over the six-month period and by PKR 1.7 billion in the second quarter. The company also received dividends of PKR 1.6 billion from PMP and FFBL Tower in Q2, and PKR 0.8 billion from Askari Bank in Q1. Notably, FFBL did not incur significant exchange losses during the period, a stark contrast to the PKR 4.7 billion exchange loss experienced last year.
On a consolidated basis, the Group reported a profit after tax of PKR 15.9 billion, a major improvement from a loss of PKR 3.2 billion in the same period last year. This positive trend is primarily due to FFBL’s improved profitability, along with the enhanced financial performance of joint venture PMP and associate AKBL, contributing PKR 2.5 billion (2023: loss of PKR 0.8 billion) and PKR 2.3 billion (2023: profit of PKR 1.7 billion) respectively.
The company applauds the Government of Pakistan’s decision to continue the exemption of sales tax on Urea and the reduced sales tax rate on DAP in the Finance Act 2024. This policy is expected to boost farm economics and promote balanced fertilizer use.
FFBL emphasizes that the sustainability of the fertilizer sector hinges on a consistent gas supply. Optimizing the allocation of indigenous gas is crucial to leveraging natural resources, mitigating food security risks, and saving substantial foreign exchange by reducing import dependence.
