EUR 8.80 For Business Accounts Only

FFC CY23 Analyst briefing takeaway, (AKD Off the Analyst's Desk Jan 30, 2024)

Fauji Fertilizer Company Ltd. (FFC) conducted their analyst briefing earlier today to brief investors/analysts about their CY23 financial performance and shed light on their future outlook. Following are the key highlights:

 

• To recap, the company's unconsolidated earnings amounted to PkR29.7bn (EPS: PkR23.3) in CY23, compared to PkR20.1bn (EPS: PkR15.8) in the year before, up 48%YoY. This earnings surge was attributed to improved gross margins driven by high retention prices.
• The major impetus in earnings during the year came from core operations, increasing to PkR17.8bn in CY23 from PkR8.5bn in the year before, while earnings from investments and dividends remained relatively constant at PkR11.8bn vs. PkR11.5bn in the prior year.
• Company achieved an additional 82kt production of urea in CY23, while the plant continued uninterrupted operations throughout the period. This resulted in the highest urea production recorded (2,521kt) since CY18.
• Moreover, FFC's urea market share (excluding FFBL) improved to 38%, up from 37% in CY22, while FFC's DAP market share remained constant at 6%.
• In terms of inventory, the overall total urea inventory (industry-wide) declined to 95kt compared to the opening inventory of 249kt.
• Management highlighted that due to the axel load implementation, their freight cost has increased by 48%YoY.
• Regarding subsidiaries, company's wind farms performed well, with profitability growing by 31%YoY in CY23. Additionally, Fauji Fresh & Freeze witnessed an improvement in gross profits to 17% from 12% in CY22. However, management mentioned their volumes experienced a significant drop of ~50% in the last quarter due to the Middle East conflict. Despite this, management expressed confidence and aims to achieve profitability from the subsidiary starting next year.
• On the Pressure Enhancement Facility (PEF) at MARI delivery node, the total CAPEX is US$53mn, with FFC's share being US$25mn. Management apprised that out of the total 88km of piping for phase 1, 20-25km is already completed, and the remaining is expected to be finished by mid-CY25. The facility is projected to be operational by the start of CY26.
• Regarding the SNGP pipeline project, management informed that the execution work is set to commence by the end of February and is expected to conclude by the end of the current calendar year. The total cost of the project is ~PkR2.0bn.