FFC Q4 earnings up 90%

KARACHI: Fauji Fertilizer Company (FFC) announced its financial results for the fourth quarter of 2024 (Q42024), reporting an unconsolidated quarterly profit of Rs14 billion (EPS: Rs9.94), reflecting a 90 per cent year-on-year (YoY) increase.

Despite the impressive growth, the result fell short of industry expectations, stated an analyst at Topline Securities. The company declared a quarterly cash dividend of Rs21 per share, aligning with market forecasts, bringing the total cash dividend for 2024 to Rs34.86 per share, with a payout ratio of 76.6 per cent.

For the full year 2024, FFC recorded earnings of Rs64.7 billion (EPS: Rs45.49), a significant 118 per cent YoY rise compared to Rs29.6 billion (EPS: Rs20.85) in 2023. The earnings decline of 42 per cent quarter-on-quarter (QoQ) was attributed to a Rs4 billion impairment loss on a subsidiary and a 46 per cent QoQ drop in other income due to reduced interest rates.

The expected Rs2.5 billion dividend income from FFBL Power Company did not materialise during the quarter.

The company reportedly made another sales tax-related provision of Rs3-4 billion on the FFBL portfolio in Q42024, following a similar Rs3.4 billion provision in Q32024. Net sales for the quarter surged 3.4 times YoY to Rs150 billion, driven by the merger with FFBL in July 2024 and increased DAP and urea offtake by 50 per cent and 24 per cent YoY to 380,000 and 839,000 tonnes, respectively.

Other income grew by 48 per cent YoY to Rs6.7 billion in Q42024, taking the full-year other income to Rs35 billion, primarily due to higher interest and dividend income from subsidiaries and associates. Distribution expenses spiked by 155 per cent YoY to Rs10 billion due to increased DAP offtakes, which typically elevate distribution costs. Finance costs decreased to Rs1.6 billion, down 24 per cent QoQ and 16 per cent YoY, likely due to falling Kibor rates.

Tax expenses for Q42024 stood at Rs13.2 billion, with an effective tax rate of 48.3 per cent, compared to Rs7.5 billion and an effective tax rate of 46.7 per cent in Q42023. The full-year effective tax rate was recorded at 41.7 per cent, down from 44.6 per cent in 2023.