Islamabad January 30 2023: Fauji Fertilizer Bin Qasim profit decline 63.6 percent in 2022 to PKR 2,327 million, according to company filing to the Pakistan Stock Exchange.
The year 2022 was a challenging year for many reasons - severe economic crisis resulting in significant devaluation of PKR, severe inflation and high interest rates, coupled with domestic floods resulting in tragic loss of life and livelihood. Businesses across the country have suffered from the challenges with many temporarily or permanently closing down. The DAP business faced an even bigger challenge due to the havoc played by Ukrainian war on International DAP prices. Consequent to DAP prices touching an all-time high of PKR 14,931 / bag, the demand collapsed to 1,175 KT in 2022, industry receding to 2012 levels, resulting in FFBL carrying forward 188 KT to 2023.
The improved Operating Profit of the Company was impacted by higher interest rates and first-time 10% Super Tax of PKR 2.8 Billion (on profits of 2021 and 2022), collectively impacting the bottom line by PKR 5.3 Billion. Despite all these challenges the Company remained in the black with a year end PAT of PKR 2.3 Billion.
On consolidated basis, the group achieved revenue of PKR 183 Billion, Gross Profit of PKR 35 Billion and Operating Profit of PKR 24 Billion. After accounting for Super Tax of PKR 2.8 Billion, the Group achieved profit after tax of PKR 8 Billion (2021: PKR 9.2 Billion).
Challenges continued to multiply for DAP. The Government perhaps ignoring the importance of DAP on agricultural yields is pursuing policies which have further marginalized the domestic DAP business, removing GST on imports, delayed announcement of Kissan package and wheat support price. All of this has resulted in significant stocks at the year-end followed by a temporary closure of PMP plant in Morocco and DAP Plant in Pakistan. We are expecting to resume production in Feb/Mar 2023.
Unavailability of Foreign Exchange and further devaluation of the rupee continue to have significant adverse financial impact. The business faces a further challenge now due to declining International DAP prices resulting in reduced margins on inventory held at the year end.
Though the Management is making all efforts to manage the situation, GoP needs to provide a level playing field by imposing equivalent taxes/duties on import of DAP and support in establishing LCs for raw material and other essentials. This will ensure DAP availability throughout the year at competitive prices.