FFBL 4QCY23 Result Review?Surprise dividend despite earning dip, (AKD Off the Analyst's Desk Jan 25, 2024)
FFBL 4QCY23 Result Review—Surprise dividend despite earning dip
Fauji Fertilizer Bin Qasim Limited (FFBL) announced its 4QCY23 result today, where the company posted earnings of PkR4.0bn (EPS: PkR3.1) compared to PAT of PkR5.3bn (EPS: PkR4.1), a decline of 24%QoQ. The result fell short of expectations due to higher-than-anticipated distribution charges and increased taxation. Surprisingly, a cash dividend of PkR1.0/sh was announced alongside the results.
- Company’s topline clocked in at PkR56.2bn vs. PkR70.1bn in the preceding quarter, a 20%QoQ decline, mainly due to a 34% quarterly decline in DAP sales.
- Notably, gross margins improved significantly to 28.4% vs. 14.8%/12.1% in 3QCY23/SPLY, respectively. The said improvement is driven by increased DAP prices, averaging PkR12.3k/bag compared to PkR10.7k/bag in the previous quarter.
- Distribution expenses experienced a 1.2x quarterly increase to PkR5.4bn, possibly due to elevated transportation costs linked to axle load implementation.
- Furthermore, other income clocked in at PkR3.1bn (↑11%QoQ) due to a surge in short-term investments to PkR13.1bn in Sep'23 from PkR6.1bn in Jun'23.
- Moreover, finance costs witnessed a 52%QoQ decline to PkR1.1bn vs. PkR2.4bn in the preceding quarter, attributed to reduced debt levels, with the company decreasing total debt from PkR46.5 billion to PkR25.5 billion in Sep'23.
- Taxation for the quarter remained high, with an ETR calculating 60% compared to 26% in 3QCY23. Further clarification on this aspect is awaited.
- Finally, the company declared a cash dividend of PkR1.0/sh, marking the first dividend announcement since CY18.
AKD Securities Ltd. is one of the leading securities firm in Pakistan, providing a comprehensive range of investor focused services, including equity brokerage, economic and securities research, investment banking and financial advisory services. AKD Securities accounts for more than 6% of the average daily value of the Karachi Stock Exchange. AKD Securities was the first brokerage house to launch an online trading platform in Pakistan in November 2002 and now has the largest market share with over 6000 customers. This has helped diversify and expand the retail investor base in the country and ushered in a whole new universe of investors to the stock market.
AKD Securities Ltd. caters to a diversified group of domestic and international institutional investors, high net worth individuals and upscale retail clients, including expatriate Pakistanis. With high quality research, unparalleled execution and distribution capability for both regular and large block trades, AKD Securities Ltd. has earned an outstanding reputation in the Pakistani securities industry.Outside of commercial banks, AKD Securities Ltd. is one of the biggest capital market firms in the country. AKD Securities is the leader in raising and providing risk capital in underwriting, market making and mergers and acquisitions in Pakistan. Good corporate governance and professionalism are emphasized throughout the firm and AKD Securities Ltd. is amongst the very few companies to have introduced a firm-wide comprehensive CODE of ETHICS, overseen by an independent compliance manager.Ultimately, our success is based on the quality of service we provide to our customers and the trust and confidence reposed in us by them. Our focus, therefore, remains on customer satisfaction at all levels in the company.
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