Fauji Fertilizer Company Limited (FFC) announced its financial results for the fiscal year ending December 31, 2023, during its Board of Directors meeting on January 26, 2024.
In 2023, the Pakistani rupee continued to fall against the US dollar, while high interest rates and inflation increased the company’s operational and financing costs. The retrospective increase in the Super Tax levy put additional strain on the company’s profitability, resulting in an effective tax rate of 45%, up from 40% the previous year.
In order to offer farmers with urea at the most competitive pricing in 2023, the firm only partially passed on the 75% rise in gas prices for the fertilizer industry.
The fertilizer industry had significant variations in urea selling prices, with FFC offering urea at decreased selling rates of around Rs 200-500 per bag for the majority of the year. As 2023 came to a close, the price of sona urea was at Rs 3,400 per bag, with global costs around Rs 6,200 per bag.
FFC’s vast statewide network of dealers and warehouses ensured fertilizer availability across the nation. It also stopped some parties from engaging in unethical behavior by distributing fertilizer fairly and tracking dealer stock and fertilizer shipments in real-time. Dealerships were trained on how to sell fertilizers at FFC-recommended rates, and farmers were reminded of the need of purchasing commodities from registered dealers at permitted pricing. The company, industry, and government have collaborated to develop a strategy for urea import and distribution in 2024, which would further assist farmers in dealing with urea pricing and availability issues.
Impressively, urea output reached 2,521 thousand tonnes, 5% higher than the previous year, all while maintaining the best possible environmental, health, and safety requirements.
The profitability for 2023 only covers the Company’s need to accumulate reserves for the capital-intensive and foreign exchange-denominated nodal compression project, as well as the necessary maintenance of world-class plants. The Company is preparing to begin phase II of the important Nodal Compression Project with a capital investment of more than USD 100 million.
The after-tax profit was Rs 29.67 billion, including Rs 17.1 billion in other income. However, earnings in US dollars fell in compared to 2021, remaining at the 2017 level.
FFC also maintained its significant tax and levy revenue contribution to the national exchequer, which was Rs 36 billion this year versus Rs 30 billion the previous year. Furthermore, the Company enabled the country to save nearly USD 1 billion in foreign money in 2023 through import substitution, for a total of USD 4.8 billion in savings over the previous five years.
