FFC records net earn­ings of Rs2.73b in Q1

Pakistan Observer - - ECONOMY WATCH - STAFF RE­PORTER

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.

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