FFBL announced highest ever profit of Rs6.2bn in 2Q2024

Staff Report: Fauji Fertilizer Bin Qasim (FFBL) announced its 2Q2024 financial result today, wherein the company recorded the highest ever unconsolidated quarterly profit of Rs6.2bn (EPS: Rs4.84) vs. PAT of Rs479mn (EPS: Rs0.37) reported in the same period last year. This takes 1H2024 earnings to Rs10.56bn (EPS: Rs8.18) compared to a loss of Rs4.9bn (LPS: Rs3.83).FFBL and FFC Amalgamation; SWAP Ratio Estimation

The 2Q2024 result came higher-than-industry expectations due to higher gross margins and other income. We expected gross margins of 17.5%; however, actual margins clocked in at 22.5%, up 961 ppts YoY in 2Q2024. Other income increased by 83% YoY to Rs4.6bn in 2Q2024 due to higher dividend income from its subsidiaries and associates.

Net sales of the company increased by 43% YoY to Rs50bn in 2Q2024 due to a jump in DAP and Urea offtake by 7% and 64% YoY to 327k and 215k tons, respectively. Additionally, a higher retention price also played a role in boosting net sales. Selling and distribution expenses increased by 41% YoY to Rs2.2bn in 2Q2024, which is in line with the increase in volumetric sales and the inflationary environment.

Finance cost clocked in at Rs1.1bn, down by 61% YoY due to a fall in short-term borrowings. FFBL’s tax expense clocked in at Rs5bn (effective tax rate of 44.5%) in 2Q2024 vs. Rs1.5bn (effective tax rate of 76%) in 2Q2023. Along with the result, the company did not announce any cash dividend.