FFC 4QCY23 Result Review?Higher taxation & provisions bite into profits , (AKD Off the Analyst's Desk Jan 26, 2024)
FFC 4QCY23 Result Review—Higher taxation & provisions bite into profits
Fauji Fertilizer Company Limited (FFC) announced its 4QCY23 financial results today, where the company posted unconsolidated earnings of PkR7.5bn (EPS: PkR5.9) vs. PkR9.1bn (EPS: PkR7.2), down 18%QoQ. The quarterly earnings decline is attributed to increased loss allowance on subsidy receivables from GoP and higher-than-expected taxation (ETR: 47%).
- Topline of the company clocked in at PkR43.4bn vs. PkR44.1bn (↓2%QoQ), owing to 10% quarterly decline in the urea volumes (totaling 594k tons vs. 664k tons in 3QCY23). However, a 11%QoQ increase in retail prices largely offset the impact.
- Distribution expenses surged by 32%QoQ to PkR4.0bn, possibly due to increased transportation costs over axle load implementation.
- Furthermore, other income declined by 27%QoQ to PkR4.6bn vs. PkR6.2bn in the quarter before, primarily due to absence of dividends from power subsidiaries.
- A major deviation from our expectations was a higher loss allowance on GoP subsidy receivables, clocking at PkR2.3bn vs. PkR0.1bn in previous quarter and PkR0.7bn in CY22.
- Additionally, taxation remained high at PkR4.7bn (Effective Tax Rate: 47%). Further clarification on this aspect is awaited.
- Overall, CY23 earnings accumulate to PkR23.3/sh vs. PkR15.8/sh in the year before, up 48%YoY, majorly due to elevated gross margins amidst increased retail prices.
- Finally, company announced year-end cash dividend of PkR4.1/sh, taking full-year dividend to PkR15.5/sh (CY23 payout: 66%).
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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