Fauji Fertilizer Company announces significant growth in nine-month financials

On October 28, Fauji Fertilizer Company Limited (FFC) disclosed significant financial growth for the nine months ending in September 2024 (9M2024). The announcement, made via the Pakistan Stock Exchange, revealed a net profit of PKR 42.55 billion (approximately US$152.94 million), representing a striking 92% increase from the PKR 22.214 billion (US$79.84 million) recorded during the same period the previous year.

In the third quarter of 2024 alone, the company’s profitability surged by 80% year-on-year to PKR 16.481 billion. This growth was primarily driven by a 51% hike in urea prices and a 15% rise in DAP prices, with net sales climbing 43% year-on-year to reach PKR 165.914 billion.

Strategically, FFC is engaged in a significant merger with Fauji Fertilizer Bin Qasim Limited (FFBL), aiming to consolidate operations and enhance urea production capacity. This move is part of FFC’s broader strategy to meet domestic urea demands and ensure food security in Pakistan.

Financial charges for FFC increased by 5% year-on-year, totaling PKR 4.189 billion due to higher interest rates. However, a decline in rates in the third quarter led to a 3% reduction in finance charges. Other income for the company also saw a dramatic increase, rising by 98% to PKR 24.841 billion, thanks largely to higher dividend income from associates and increased earnings from its wind power segment.

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Brigadier Zulfiqar Ali Haider (Retd), representing the company, attributed the strong performance to exceptional returns on investments, including substantial dividend income. The company reported an effective production capacity utilization with 1.9 million metric tonnes of urea produced and 1.958 million metric tonnes sold, securing a market share increase from 39% to 43% over the year.

A key aspect of FFC’s strategy has been the sale of urea at prices significantly lower than international rates, which has not only benefited local farmers by USD 320 million but also conserved the country’s foreign currency reserves. The company has also expanded its direct reach to farmers through the opening of 70 company-owned sales outlets and the registration of 50,000 farmers covering 600,000 acres.

The forthcoming merger, set to be completed following approvals from respective boards, will see a combined urea production capacity of 2.60 million metric tonnes and a DAP capacity of 0.65 million metric tonnes. This strategic alignment is expected to deliver considerable market efficiencies and strengthen the company’s position as a leader in the agricultural sector.