FFC records net earnings of Rs2.73b in Q1
LAHORE—Fauji Fertilizer Company (FFC) has announced results for the first quarter amid highly challenging business environments. In spite of adverse market conditions FFC recorded net earnings of Rs 2.73 billion for the first quarter ended March 31, 2016. Urea industry remained under severe stress during the period. This is mainly ascribed to poor farm economics and unprecedented rise in cost of production, while declining international urea prices and nonimplementation of ‘Kissan Package’ by the Government caused market uncertainty. Thus the urea market witnessed substantial decline to around 50 % in sales, while inventory accumulated to 1.2 million tonnes with combined share of FFC/FFBL at 35% of the total inventory.
Urea production by the Company, however, remained par excellence, with second highest urea output ever of 614 thousand tonnes, which speaks of the operational efficiency of the engineers and the management. Sales revenues were also negatively impacted by suppressed selling prices, which resulted in significant absorption of feed/fuel gas costs that is more than double the prevalent gas prices in the Middle East.
The core business of the Company witnessed significant decline due to factors highlighted above. The unfavourable market environments continue to pose considerable risk to the Company profitability. However, the deficit has been largely mitigated through highest ever dividend of Rs 2.27 billion received during the quarter.