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Even a well over 100 percent year-on-year increase in net profit did not excite investors as Fatima Fertilizer’s stock failed to register an increase after the company announced its 9MCY12 financial results yesterday.
It was the 30 percent year-on-year decline in profits for the 3QCY12 that played on the investors’ minds, coupled with the uncertainty that has been looming over the fertilizer industry for a while.
The 3QCY12 was a depressing one as sales went down by 22 percent year-on-year. Fatima Fertilizer is comparatively better placed in terms of geographical proximity than most other players; hence, gas supply disruption is not as big a headache as it is for some others.
That said the overall lack of appetite for urea off-take hit Fatima Fertilizer as farmers have been reluctant to buy urea in large quantities, anticipating more imported urea for the upcoming Rabi season to be available at subsidised rates.
The company’s bottom line was dented by a huge increase in financial charges, despite the company having repaid Rs10 billion earlier in the year and acquiring a new mark-up facility of Rs6 billion on economical terms. The bottom line could have been much thinner, had it not been for an 11 percent effective tax rate for the 3QCY12, inflating the earrings for the quarter.
Going forward, urea sales may still be sluggish as more urea imports are expected to arrive. However, Fatima Fertilizer expects to benefit from an increase in phosphate fertilizer demand, which could bode well for its NP and CAN sales.


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FATIMA FERTILIZER COMPANY
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9MCY12 chg 3QCY12 chg
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Sales 18,288 150% 5,680 -22%
Cost of sales 6,760 156% 2,332 -12%
Gross profit 11,529 146% 3,348 -29%
Gross margin 63% 59%
Distribution cost 811 386% 133 -20%
Finance cost 4,363 165% 1,367 -17%
Profit before tax 5,590 115% 1,599 -40%
PAT 4,010 115% 1,417 -30%
EPS (Rs) 1.95 0.67
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Source: KSE notice

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