In a notification sent to Pakistan Stock Exchange on Wednesday, Fauji Fertilizer Company (FFC) reported an unconsolidated profit of Rs2.6 billion for the July-September quarter of 2016.
The company reported a profit of Rs 2.6 billion or Rs 2.05 per share which is 29 percent lower than Rs3.6 billion or Rs2.90 per share in the same quarter of the previous year. The result also accompanied a cash dividend of Rs 1.75 per share.
‘’Major decline in earnings came from decrease in urea volumetric sales (down 6 percent YOY), lower margins amid increased feed and fuel gas prices and reduction in urea prices (down 11 percent YOY),’’ said Saqib Hussain in an analyst report of Sherman Securities.
FFC reported revenues of Rs17.6 billion during the third quarter of 2016, an increase of 16 percent compared to Rs15.1 billion it earned in sales during the same quarter of 2015.
‘’Increase in [third quarter] earnings can be attributed to higher urea volumetric sales, (up 12 percent quarter on quarter (QoQ), significant increase in other income by 55 percent (QoQ) on account of subsidy package announced by the government and rise in the share of profits by 270 percent (QoQ) from associate companies,’’ said Hussain.
The result is ‘below market expectation’ according to AKD Securities.
On a sequential basis the fertilizer posted net earnings of Rs7.5 billion (EPS of Rs5.90) during nine-month period of 2016. This is 37 percent lower than the company’s profit of Rs11.9 billion it earned in the same period of last year.
‘’This [decline] can be attributed to unprecedented adverse market conditions caused by weak farm economics and delayed implementation of subsidy on urea by the government,’’ said analyst at AKD Securities.
Following the result announcement, the fertilizer’s share price appreciated by Rs1.99 to Rs105.13 compared to Rs103.14 closing price of the previous day. In total 4.2 million shares of the company were traded on the result day.