Fauji Fertilizer Company Limited (FFC) posted a net profit of PKR 20.8billion (EPS:16.37) in 2020, up 22% YoY
against PKR 17.1billion (EPS:13.45) in 2019. Company has also announced a dividend of PKR11.2/share during 2020.

Increase in Earnings

Increase in the company’s profitability is primarily due to higher Urea prices during the year, one-time
the positive impact of GIDC liability remeasurement, lower finance cost due to Low-Interest Rates and reduction in distribution cost.

As per the management of the company, Farmers Income has increased over the year with estimated Income of wheat/sugarcane/basmati rice crop increased by 103/38/7% YoY in last season to PKR24.5/49.3/27.7K per acre.

Although, due to increased pest attack and lower yields, farmers’ income from cotton crop decreased by 28% YoY to Rs10.0K per acre in 2020.

FFC market share in 2020 stands at hefty 42% primarily due to lower production from LNG based Fertilizer plants. FFC also sold 233,000 tons of DAP in 2020.

FFC re-measured its outstanding PKR 62.6bn GIDC liability and booked a gain of PKR 5.9 in the income statement. Company will reverse this gain in next four years. FFC also booked an impairment of PKR1 billion during 2020 on its investment in Fauji Fresh n Freeze that leads to total impairment of PKR 2.1billion.

FFCis in initial stages of planning to to set up a new 1 million tons DAP plant. However, no further details are available.

Fauji Fertilizer Ltd Outlook 2021

FFC is growing with expansion in power and fertilizer complex. FFC has acquired 30% shareholding in 330MW coal mine mouth power plant of Thar Energy Limited (TEL). Furthermore, FFC is also planning to set up a 1.0mn ton DAP plant and 1.3mn ton fertilizer complex in Tanzania. All these developments along with resumption of dividends from FFBL is expected to remain positive for FFC in long-run.

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