FFBL posts 48pc drop in full-year profit

KARACHI: Fauji Fertilizer Bin Qasim Limited (FFBL) reported a 48 percent net profit for 2023 on Thursday, as lower phosphoric acid prices hurt its joint venture in Morocco.

The company profit fell to Rs4.15 billion from Rs8 billion a year earlier, a filing to Pakistan Stock Exchange showed. Earnings per share declined to Rs2.35 from Rs4.53 .

Analyst attributed the fall in profit to the loss in Pakistan Maroc Phosphore S.A (PMP), a joint venture between FFBL and Morocco's Office Cherifien des Phosphates (OCP), which produces phosphoric acid, a key raw material for DAP.

PMP was affected by international commodity price trends i.e. high decrease in phosphoric acid price as compared to its raw material prices, they added.

FFBL also announced a final cash dividend of Re1 per share, or 10 percent, for the year ended Dec. 31, 2023.

The company's revenue rose 21 percent to Rs221.61 billion, as it sold more DAP and benefited from higher domestic prices. Gross profit increased 25.4 percent to Rs44.28 billion, while other income more than doubled to Rs7.63 billion, mainly due to higher dividend income from associates and subsidiaries. However, FFBL's expenses also rose, as distribution and selling costs jumped 30.4 percent to Rs14.96 billion, and finance costs surged 51 percent to Rs12.63 billion, due to higher interest rates and inventory carrying costs. The company's tax expense also increased 63 percent to Rs12.98 billion.

Brokerage Insight Securities in a note said the FFBL result "is below our expectations mainly due to higher than expected selling and distribution expenses coupled with higher ETR".