FFC Unveils Fiscal Year 2023 Financial Results amid Challenging Economy

Fauji Fertilizer Company Limited (FFC) has disclosed its financial outcomes for the fiscal year ending on December 31, 2023, following a Board of Directors meeting on January 26, 2024.

The year 2023 grappled with elevated inflation, soaring interest rates, and a persistent decline in the Pak Rupee against the US dollar, resulting in escalated operating and financing expenses for FFC.

The retrospective surge in the Super Tax levy contributed to an increased effective tax rate of 45%, compared to the preceding year's 40%, further impacting the Company's profitability.

Despite a significant 75% hike in gas prices for the fertilizer sector, FFC chose to absorb a partial impact on urea prices throughout 2023, aiming to provide farmers with the most economical rates.

Urea selling prices experienced notable fluctuations within the industry, with FFC offering urea at reduced prices ranging from Rs 200-500 per bag for a substantial part of the year.

By the end of 2023, Sona urea prices stood at approximately Rs 3,400 per bag, a considerable contrast to international prices hovering around Rs 6,200 per bag.

FFC ensured nationwide fertilizer supply through its extensive network of warehouses and dealers, implementing real-time monitoring to prevent unscrupulous practices. Dealers were urged to market fertilizers at FFC's suggested rates, promoting fair and transparent pricing.

In collaboration with the industry, FFC devised a plan with the government to import and distribute urea in 2024, addressing availability and pricing concerns for farmers.

Urea production reached an impressive 2,521 thousand tonnes, a 5% increase from the previous year, maintaining high reliability and adhering to Health, Safety, and Environment standards.

The profitability for 2023 barely meets the Company’s requirements to accumulate reserves for the capital-intensive Nodal Compression Project, in addition to essential plant maintenance at a world-class level.

FFC is poised to initiate phase II of the critical Nodal Compression Project, entailing a capital outlay exceeding USD 100 million.

Profit after tax amounted to Rs 29.67 billion, including Rs 17.1 billion of other income. Dollar-denominated earnings, however, displayed negative growth compared to 2021, resembling levels from 2017.

FFC continued its substantial contribution to the national exchequer, contributing Rs 36 billion in taxes and levies, a notable increase from Rs 30 billion the previous year.

The Company facilitated foreign exchange savings of approximately $1 billion through import substitution in 2023, contributing to an aggregate savings of around $4.8 billion over the last five years.