Fertiliser sector witnessed a depressed financial performance as the profitability of listed companies fell by 7 percent during the calendar year 2006.
According to statistics profitability of the listed manufacturers including Fauji Fertiliser Bin Qasim (FFBL), Fauji Fertiliser Company Limited (FFC), Dawood Hercules Limited (DAWH) and Engro Chemicals Pakistan Limited fell by 7 percent in 2006. The profit of these four companies profit during the year 2006 stood at Rs 11.68 billion as compared to Rs 12.53 billion during the previous year 2005.
Statistics shows that mixed trend were witnessed in the profitability of the listed manufacturers. Engro''s earnings rose by 10 percent to Rs 2.5 billion, whereas FFC and DAWH were down by 5 percent and 28 percent to Rs 4.6 billion and Rs 2.05 billion respectively, while FFBL remained stagnant with the year-end profit after tax at Rs 2.45 billion.
Demand for fertiliser rise in the last quarter of the calendar year always as the sowing season begins. Industry sales revenue earned 40 percent Rs 26.34 billion during the last quarter of the calendar year 2006 out of the total revenue of Rs 66.14 billion.Listed fertiliser companies have earned Rs 4.4 billion profit during the last quarter of 2006, which is the 38 percent of the total profit of Rs 11.68 billion.
Hettish Karmani an analyst of Atlas Capital Market says that although sales performance of the manufacturers was up by 8 percent to Rs 66.14 billion, but cost factor hit the profit, which rose by 9 percent to Rs 46.2 billion during the last calendar year.
He said that the major factors in the earnings decline were the higher financial charges and sales and distribution expenses. As financial charges rose by a huge 61 percent to Rs 1.8 billion against Rs 1.12 billion during the same period last year, he added.
He said that on the individual basis the financial charges of Engro, FFBL, FFC and DAWH rose by 14 percent, 59 percent, 59 percent and 115 percent respectively, while the rising cost of fuel raised the selling and distribution expense by 15 percent to Rs 5.88 billion, previously being Rs 5.13 billion.