Karachi April 26 2023: Fauji Fertilizer Bin Qasim Limited reported loss of PKR 5.4 billion for the first quarter of 2023, according to company filing to the exchange.
Share price of the company drop 25 paisa or 1.97 percent to close at PKR 12.45 at Pakistan Stock Exchange.
“The Company faced adverse financial effects during the first quarter of 2023 due to exogenous shocks such as devaluation of Rupee, increase in interest rate, high inflation, and continuation of 5%-18% GST on locally produced DAP, whereas GST has been exempted on imported DAP, thus no level playing field”
says Company Chairman Waqar Ahmed Malik
The Rupee depreciated from PKR 226/USD on 1st January 2023 to PKR 284/ USD as at 31 March 2023, which resulted in an exchange loss of PKR 4.6 Billion in this quarter as compared to PKR 0.6 Billion in the same quarter of last year (SQLV), due to settlement of all over-due and due foreign exchange liabilities emanating from import of basic raw material, i.e. phosphoric acid. Over-due payments were pending since July 2022 due to scarcity of foreign exchange in the banking system.
SBP policy rate increased to 20% at 31 March 2023 as compared to 9.75% on 31 March 2022. The Company was already carrying higher DAP inventory because of demand disrupt ion last year, consequent to the massive floods and war in Ukraine. This has resulted in finance cost of PKR 2.5 Billion during the quarter as compared to PKR 0.7 Billion in SQLY.
Inflation stood at 35% as on 31 March 2023 compared to 11 % on 31 March 2022, which significantly increased the cost of production. Additionally. the GOP's discriminatory GST policy continued to favor DAP importers over the local producer, which resulted in additional cost of PKR 0.7 Billion during the quarter. Concurrently, FFBL gas availability was also curtailed by 51 % during the quarter under review as compared to 9% during SQLY.
On operational basis the business did well by selling 127 Kmt DAP during this quarter as compared to 114 Kmt during SQLY, hence significantly reducing the inventory that was carried over from 2022. Though margins remained under pressure, through prudent financial management, the Company achieved an operating profit of PKR 1.3 Billion as against PKR 3.3 Billion during SQLY. However, due to the exogenous shocks mentioned above, the Company reported a loss after tax of PKR 5.4 Billion as compared to a profit after tax of PKR 1.6 Billion in SQLY.
On a consolidated basis, the Group has reported a loss after tax of PKR 4.6 Billion as compared to a profit after tax of PKR 3.2 Billion in SQL Y, mainly due to exchange loss of PKR 4.9 Billion (SQLY: PKR 0.6 Billion), finance cost of PKR 3.4 Billion (SQLY: PKR 1.4 Billion), and GST of PKR 0.7 Billion on local produce of DAP by FFBL.
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