Fauji Fertilizer Corporation profit to reach Rs.18 billion

LAHORE: Fauji Fertilizer Corporation (FFC), Pakistan’s largest urea manufacturer, having 40 percent market share, has become the 6th most profitable listed firm in Pakistan beating one of the largest banks (UBL), largest oil marketing firm (PSO) and largest telecom operator (PTC), expert said in a report.

They said that five years back FFC profit was Rs 5 billion and this may reach Rs 18 billion in 2011, a 360 percent growth in 5 years. And from last year FFC is expected to post an earnings jump of 64 percent in 2011. The credit of this extra ordinary performance goes to Engro and not to FFC management. Thanks to higher international prices and improving farmers income, in last 7 months Engro has increased urea price by Rs 375 or 46 percent (excluding GST) a bag in order to mitigate its production losses on its new plant. For FFC and other plants (like Fatima) this price rise is blessing in disguise.

And if current urea prices remain stable (assuming gas price increase to be passed on), FFC’s profits may jump to Rs 22 billion in 2012. In worst case if Engro’s $1.1b new plant remain closed for 12 months in 2012 due to gas shortages or due to government’s preference to allocate gas to other sectors, then Engro may increase urea price by Rs 600-700 per bag to Rs 1785-1885 per bag. This would boost 2012 FFC profits to Rs 36b.

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