Fatima Fertilizer Company Limited announces Q1 financial results

AKD Research has just released an update on recent quarterly results. Here are the important points from the quarterly earnings announcement:

Fatima Fertilizer Company Limited (FATIMA) has unveiled its financial results for the first quarter of CY24, showcasing notable changes in earnings and key financial metrics.

Earnings Overview

FATIMA reported earnings of PkR8.4 billion (EPS: PkR4.0) for 1QCY24, a decrease from PkR10.0 billion (EPS: PkR4.8) in the previous quarter, marking a -16% quarter-on-quarter (QoQ) change and a substantial +108% year-on-year (YoY) increase.

Revenue and Sales Volume

The company’s total revenue, or topline, amounted to PkR66.0 billion for the quarter, down 11% QoQ from PkR74.0 billion. This decline is mainly attributed to lower sales volumes, particularly in Urea, NP, and DAP segments, which fell by 16%, 14%, and 89% QoQ, respectively.

Gross Margins

FATIMA’s gross margins significantly improved to 41.5%, surpassing expectations of 24.3%. This improvement is likely due to the spread of negative margins from imported urea throughout the year.

Other Income and Expenses

Other income witnessed a sharp decline of 51% QoQ, totaling PkR2.4 billion compared to PkR5.7 billion in the previous quarter, primarily due to the absence of one-time gains recorded in the last quarter of CY23.

On the other hand, other expenses surged to PkR5.9 billion compared to PkR2.3 billion in the preceding quarter, marking a notable increase of 153% QoQ. This increase is possibly attributed to impairment charges on investments, pending further clarification.

Finance Costs and Taxation

Finance costs for the quarter stood at PkR822 million, down 22% QoQ from PkR1.1 billion in the last quarter of CY23, mainly driven by reduced borrowings.

Furthermore, the effective tax rate (ETR) during the period was 49%, higher than the 42% reported in the same period last year (SPLY)

Category	1QCY24 (mn)	4QCY23 (mn)	QoQ	1QCY23 (mn)	YoY
Sales	66,039	73,993	-11%	38,086	73%
COGS	38,601	51,562	-25%	23,579	64%
Gross Profit	27,438	22,431	22%	14,507	89%
Gross Margins	41.5%	30.3%	11.2%	38.1%	3.4%
Opex	6,045	5,066	19%	4,470	35%
Other Income	2,304	4,684	-51%	466	394%
Other expenses	5,912	2,338	153%	2,196	169%
Finance Cost	822	1,052	-22%	1,223	-33%
Taxation	7,910	7,972	-1%	2,959	167%
NPAT	8,394	10,016	-16%	4,041	108%
EPS (PkR)	4.0	4.8	–	1.9	–
DPS (PkR)	–	2.8	–	–	–

Conclusion

In conclusion, FATIMA’s 1QCY24 financial results reflect a mixed performance, with decreased earnings mainly influenced by lower other income and increased other expenses. Despite challenges in sales volumes, improved gross margins and reduced finance costs have contributed positively to the company’s financial outlook.

Disclaimer

The information in this article is based on research by AKD Research. All efforts have been made to ensure the data represented in this article is as per the research report. This report should not be considered investment advice. Readers are encouraged to consult a qualified financial advisor before making any investment decisions.