FFC announces 66 recent YoY jump in its earnings

LAHORE: Fauji Fertilizer Company Limited (FFC) has announced its 1HCY11 results. Earnings announcement is exactly in line with our expectations, as the company has posted a substantial 66 percent YoY jump in it’s earnings to PKR8.19bn as against PKR5.10bn in the corresponding period of the last year. Moreover, in line with our expectation, the company has also declared a dividend of PKR4.75/share for 2QCY11.

We believe there were several good reasons behind this impressive performance. Top line of the company posted an enormous 21 percent YoY growth to PKR24.23bn as against PKR19.95bn in 1HCY10. The growth in sales is attributable to the higher urea prices which is the key product of the company. Cost of the sales declined by 5 percent YoY to PKR10.53bn as against PkR11.12bn in 1HCY10, owning 7 percent YoY lower production of urea, due to gas curtailment.

Another main reason behind the tremendously higher profit was 89 percent YOY increase in other income, which in our view, is on the back of dividend income received from FFBL. Moreover, 5 percent YoY lower financial charges also well contributed in augment of the bottom line.

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