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FFC posts Rs 4.5bn profit in 1st half

Staff Report

KARACHI: Fauji Fertilizer Company (FFC) posted Rs 4.5 billion net profit in the first half of 2009, reflecting an increase of 38 percent over Rs 3.286 billion in the same period of previous year.

The earning per share of the company also rose to Rs 3.70 in the period against Rs 4.84 in the previous year, a notice of Karachi Stock Exchange (KSE) announced on Friday.

Analysts said that higher urea prices along with additional quantum of dividend income from FFBL were the major reasons for the jump in earnings.

The company also announced a second interim dividend of Rs 2.6 per share taking the cumulative dividend per share for 2009 to Rs 6.9. Company’s revenues rose 20 percent to Rs 16.9 billion in the said half as compared to Rs 14 billion in the corresponding period of previous year.

The sharp jump in revenues is driven primarily by higher urea prices, as urea offtake remained at 1.3 million tonnes close to levels recorded in first half of 2008.

Average ex-factory urea prices in the period under review stood at Rs 684 per bag as compared to Rs 529 per bag in the previous year, up by 29 percent. Due to higher urea prices, gross margins improved by 145 basis points to 45.1 percent from 43.6 percent previously.

Analysts said that higher dividend income from FFBL of Rs 1.1 billion (up 125 percent YoY) helped to completely mitigate the impact of rising finance cost and other expenses. Finance cost stood at Rs 520 million, 126 percent higher than Rs 230 million last year, while increasing inflationary pressures saw other expenses rise by 51 percent to Rs 620 million.

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