FFBL records Rs 3.2 billion profit
The FFBL management has obtained board’s approval for divestment of company stake in FWE I & II
Our Correspondent
Fauji Fertilizer Bin Qasim Limited (FFBL) has made a record profit of Rs3.2 billion in 3QCY20.
It had reported a loss of Rs1.3 billion in 3QCY19.
Furthermore, in a material notice filed at PSX, FFBL also disclosed that management had obtained the BOD approval for entering into negotiations with the potential acquirer for divestment of company stake in FWE I & II.
Besides, BOD decides to enter into formal negotiations with the acquirer. This acquisition process is subject to detailed due diligence, completion of procedural formalities. It requires requisite approvals from relevant Regulatory Authorities and FFBL BOD final approval.
FFBL Urea offtake increased given higher production by the company. DAP offtake increased due to large carry forward inventory by the company.
Moreover, FFBL’s DAP margins were improved by 17% year on a yearly basis in 3QCY20. Urea prices are also up by 7% YoY in 3QCY20. It barred the impact of Rs400 per bag GIDC in 3QCY20.
The company’s other income jumped up by 42% YoY in 3QCY20 due to a 64% YoY increase in the share of profitability from associates share. AKBL’s share of profitability increased by 139% YoY in 3QCY20.
Furthermore, FFBL finance cost declined by 37% YoY in 3QCY20 due to the 625bps rate cut by SBP to reduce the economic impact of the outbreak of COVID-19.
Encouragingly, losses of the Food segment have reduced significantly during the quarter. FFL’s share loss decreased by 15% YoY to Rs430mn (LPS Rs0.46) in 3QCY20 from Rs501mn (LPS Rs0.54) in 3QCY19.
Improvement in Business
Analysts said that improvement in core business would unleash the potential of a diversification drive.
They expected that international DAP margins will remain on the higher side from now on. This is because Chinese manufactures are likely to have reduced production due to COVID-19.
Furthermore, India is likely to increase DAP imports in 4QCY20 due to lower domestic production amid lockdown. FFBL DAP offtake for CY20 is expected to increase by 25% YoY due to large carry forward inventory in CY20.
The company is likely to remain a beneficiary of the Rs50 billion package for agriculture. The company will also benefit from the payment of GIDC in 24 monthly installments along with likely adjustment of payable amount against the Sales tax. The subsidy receivables would ease the cash flow concerns of FFBL. Furthermore, better pricing for wheat and sugarcane crop would also provide additional support to farmer’s liquidity position.
