Fauji Fertilizer Company’s net profit doubled in H1 2024 due to improved urea sales

Pakistan’s urea conglomerate, Fauji Fertilizer Company Limited (FFC), has not only exhibited a significant increase in net profit after tax (PAT) but has also played a critical role in addressing Pakistan’s growing food security challenges. The Company’s higher sales and competitive prices have significantly contributed to the nation’s food security and profitability.

The Company recently announced its 1HCY24 (January – June) financial results, reporting standalone earnings of PkR 26.07 billion ($93.52 million) compared to PkR 13.07 billion ($46.88 million) in the same period last year (SPLY), an increase of 99.46% YoY. The said growth is attributable to higher sales, elevated gross margins, and increased other income.

Topline clocked in at PkR 115.57 billion ($414.60 million) compared to PkR 71.95 billion ($258.11 million) in SPLY, up 60.62% YoY, primarily due to account for a jump in urea and DAP offtake by 3% and 26% YoY, respectively tagged with 62% and 19% YoY higher urea and DAP prices.

Financial charges increased by 9% YoY, clocking in at PKR 2.886 billion in 1HCY24 due to higher interest rates set by the central bank. Given the rise in transportation costs, the distribution cost jumped to PKR 10.73 billion from PKR 5.73 billion during this accounting period.

The Company has started selling its products through Company-owned stores/outlets, thus providing farmers with a channel to buy directly from the Company. Investment in this channel will benefit farmers across the country, as approximately 70 such outlets are being opened in all sales districts and will be operational by the end of the third Quarter of 2024.

The company’s plants delivered 1.279 million metric tonnes of Sona urea, operating at improved efficiencies. The Company’s strategic cost optimization measures have improved shareholder returns and demonstrated the company’s sound financial management.

Sona Urea sales stood at 1.280 million metric tonnes, 3% higher than in 2023. The Company also marketed 94,000 metric tonnes of urea imported by the Government of Pakistan, and the aggregate urea sales thus stood at 1,374 million metric tonnes. As a result, FFC’s urea market share also improved to 46% compared to 40% during the same period last year.

Fauji Fertilizer Company Limited (FFC) is Pakistan’s largest urea manufacturing company, incorporated in 1978 as a joint venture between Fauji Foundation, a charitable trust in Pakistan that owns a 44.35% equity stake in the Company, and Haldor Topsoe A/S of Denmark to set up a urea production facility with a capacity of 570,000 metric tonnes per annum. Since its inception, the Company has been committed to providing high-quality fertilizers to support Pakistan’s agricultural sector. It has grown through reinvestment in the fertilizer sector, and its production capacity currently stands at over 2 million tonnes through its three plants. Since its inception, the Company has contributed more than US$ 17.24 billion to the National Exchequer through import substitution of over 69.5 million tonnes of urea.