Brief Summary
This video provides a detailed analysis of Fauji Fertilizer Company (FFC), focusing on its financial performance, operational highlights, and technical aspects. It covers the company's recent financial results, dividend announcements, market share, and future outlook, also touches upon the company's Sharia compliance status.
- FFC announced a dividend of ₹12, bringing the total dividend to ₹19.
- Urea sales declined by 23%, while DAP sales decreased by 18%.
- FFC achieved 43% of the total urea production and 57% of DAP production in the industry.
- Revenue increased to PKR 155 billion compared to PKR 166 billion last year.
- Gross margins decreased from 42% to 34% due to higher input costs at Port Qasim plants.
- EPS increased due to improved investment income.
- Operating cash flow decreased and turned negative.
- Technical analysis suggests a potential entry point if FFC crosses 482 or falls between 427 and 450.
Introduction
The video introduces a detailed discussion about Fauji Fertilizer Company (FFC), covering its financial report, improvements, cash flow, EPS, margins, and future outlook. Additionally, the video addresses the technical aspects of FFC and the validity of news regarding its Sharia compliance.
Financial Performance and Dividend Announcement
FFC has released its financial results for the quarter ended June 30th. The company announced a dividend of ₹12, which is 120% of its par value. Combined with the previous dividend of ₹7, the total dividend payout till now is ₹19.
Operational Performance Analysis
The operational performance reveals a 23% decline in urea offtake and an 18% decrease in DAP sales. FFC achieved 43% of the total urea production in the industry, indicating a strong market share. However, only 26% of the inventory was held at the close of the period. DAP production by the company accounted for 57% of the total production in the industry, signifying a higher market share in DAP. Closing stock stood at 40%, with a DAP offtake of 288,000 tonnes and a market share of 64%.
Revenue and Gross Margin
FFC attained an aggregate revenue of 155 billion compared to PKR 166 billion during the same period last year. The increase is attributed to the integration of revenues from marketing Sona Dep and Sona Urea Granular. However, higher input costs at Port Qasim plants compressed the gross margin to 34% from 42% of the last year.
EPS and Dividend Payment Details
The company's EPS increased due to improved investment income of PKR 28 billion, enabling a high net profitability of PKR 38.5 billion, compared to PKR 26 billion last year, with an earnings per share (EPS) of ₹27.02. The dividend will be paid to shareholders whose names appear in the register of members on August 10, 2025, with books remaining closed from 11th to 13th. To be eligible for the dividend, shares must be purchased by August 6th.
Unconsolidated Financial Statement
The unconsolidated financial statement shows an increase in the top line due to marketing efforts for Sona Dep and Urea Granular. While the top line increased, the distribution cost also increased. The costing has increased almost three times, attributed to high costs at the Port Qasim facilities. Other income increased four times, positively impacting the EPS.
Cash Flow Analysis
A concerning point is the decrease in operating cash flow, which turned negative this year compared to a positive cash flow last year. Cash flow from investing activities is positive, primarily from the disposal of plant equipment and dividends received from subsidiaries and other investments. Cash flow for financing activities is negative due to loan repayments and dividend payouts, but the company still maintains positive net cash, indicating proper cash management.
Technical Analysis
FFC closed at 466. A new entry is not recommended until FFC crosses 482 or falls between 427 and 450. Potential targets are 485 and 500 plus. No bullish or bearish divergences are currently observed, and there have been good volumes in the past few days.
