Fauji Fertilizer Bin Qasim reports $485 million revenue in 9M2023 amid challenges

Fauji Fertilizer Bin Qasim Limited (FFBL), Pakistan’s sole manufacturer of DAP (Diammonium Phosphate) and granular urea, revealed its financial results for the nine months ending September 2023. The company recorded a revenue of PKR 137 billion ($485 million), a 46% increase compared to PKR 94 billion ($333 million) in the same period the previous year.

According to the financial statement released on October 30, FFBL reported a gross profit of PKR 17 billion ($60 million), an operating profit of PKR 11 billion ($39 million), and a profit after tax of PKR 0.35 billion ($1.24 million). These figures were lower compared to the same period last year—PKR 18 billion, PKR 13 billion, and PKR 1.7 billion respectively. Company officials cited an additional cost of PKR 2.5 billion incurred due to the government’s Goods and Services Tax (GST) policy, which they claim discriminates against domestic DAP producers. An exchange loss of PKR 3.6 billion on foreign payments that remained unpaid due to State Bank restrictions also impacted profitability.

The financial results indicate that higher costs of sales and finance contributed to the decline in profits. Notably, local urea prices were trading at PKR 3,595 per bag, significantly lower than the international landed price of PKR 7,500 ($26.57) per bag.

Production and Sales

FFBL experienced a 33% shortfall in its gas supply for the nine months of 2023, receiving 9,882 MMSCF against an allocated 18,564 MMSCF. This led to a decline in urea and DAP production by 134,000 metric tonnes and 229,000 metric tonnes, respectively, marking a decrease of 35% and 34% when compared to the same period last year. An additional 33-day shutdown for better DAP inventory management also impacted production.

Despite these setbacks, the company saw a 69% growth in DAP sales, which amounted to 619,000 metric tonnes. However, its urea sales decreased by 31% to 254,000 metric tonnes, leading to a reduction in its market share by 5%.

FFBL is located at Port Qasim in Karachi and remains the country’s only manufacturer of DAP and granular urea. Its challenges come amid a backdrop of broader economic conditions, including government policies and State Bank restrictions, that have impacted the fertilizer industry at large.