Fatima Fertilizer post Rs. 13 billion profit

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  • Company declares Rs. 6.32 EPS and Rs. 1.75/share dividend

Fatima Fertilizer Ltd (FATIMA) posted 2018 Net Profit of Rs. 13.2 billion EPS: (6.32), marking a 25% increase from last year. The company also announced a cash dividend of Rs. 1.75/share.

FATIMA increased profit was due to 22% increase in Revenue due to increase in product prices ranging from 15% to 50%, higher gross margins of 58% and 74% YoY higher “Other income”.

Rupees in Million20182017Change%
Net Sales45,96337,67522%
Cost of Sales19,48317,24213%
Gross Profit26,48020,36930%
Administrative Expenses2,0981,53137%
Selling & Distribution Expenses3,6303,4904%
Other Charges1,70891387%
Other Income91552674%
Financial Charges1,45091259%
Profit before Tax18,51012,76645%
Taxation5,2382,164142%
Profit after Tax13,27210,61825%
Earnings Per Share6.325.05625%
Dividend Per Share1.752.25

Future Performance

FATIMA concessionary Gas procurement arrangement with the government is coming to an end in the year 2021. Currently, FATIMA is getting gas at a discounted price of US$ 0.7/mmbtu, a price much less than its peers. Thus margins are expected to normalize in the next three years. Current Gross margins of the company stand at 58%, highest in the Fertilizer Industry. With the normalization of feed gas rates, Margins are expected to fall between 25% – 30%.

Analysts have sell recommendation for the stock as future earnings are expected to normalize.

About the Company

Fatima Fertilizer Company Limited (FATIMA) was established in 2003 as a joint venture between Arif Habib Group and Fatima Group. Fatima Group is a large business conglomerate engaged in various businesses ranging from fertilizer, textile, energy, sugar to real estate .

Fatima group companies include Fatimafert Limited (Fatimafert), Pakarab Fertilizers Limited (PFL), Reliance Commodities (Private) Limited (RCPL),
Reliance Weaving Mills Limited, Fatima Sugar Mills Limited, Fatima Energy Limited, Fatima Holding Limited and Reliance Sacks Limited.

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