Fertiliser sector registers 32 percent growth

The net profit of fertiliser sector witnessed an impressive growth of 32 percent reaching the level of Rs 7.3 billion in the first quarter of 2011. "Despite witnessing a decrease in production of 13 percent in this quarter, country's fertiliser sector was able to post a healthy revenue growth of 13 percent mainly on the back of increased prices of both urea and DAP by 34 percent each," Asad Siddiqui, an analyst at Invest Capital and Securities said.
Moreover, a decrease of 26 percent in finance cost further bolstered the bottom-line of the whole sector as fertiliser sector's profitability witnessed an expansion of 32 percent to Rs 7.3 billion in this quarter. Both FFC and FFBL have faced lower curtailment as compared to Engro, due to which both have been the prime beneficiary of price increase of both urea and DAP that was initiated by Engro.
The total revenue for FFC for the first quarter of CY11 witnessed a growth of 17 percent. Despite witnessing a fall of 14 percent in its urea off-take, mammoth increase of 45 percent witnessed in core margins of urea have bolstered FFC's gross margins by 10.7pps. Furthermore, healthy other income (up by 56 percent backed by FFBL's dividend) have hugely participated in increasing FFC's bottom-line by 51 percent.
Similar was the scenario that was witnessed by FFBL, as the company's revenue for the above mentioned period was up by 23 percent owing to better prices of DAP (up by 34 percent) which helped it to offset the impact of minor fall of 3 percent witnessed in its off-take. An increase of 31 percent in the primary margins was the main reason behind the increase of 7pps witnessed by gross margins; the impact of which was felt in the bottom-line as it went up by monumental 93 percent to reach the level of Rs 1.6 billion for the first quarter of CY11.