About the Fauji Fertilizer Bin Qasim (FFBL) Ltd
Fauji Fertilizer Bin Qasim Limited is a public limited
company incorporated in Pakistan, and its shares are quoted on the Karachi,
Lahore and Islamabad stock exchanges. The principal objective of the Company is
manufacturing, purchasing and marketing of fertilizers. The Company commenced
its commercial production effective January 1, 2000. The Company is a subsidiary
of Fauji Fertilizer Company Limited (the holding company) with shareholding of
50.88%. The design capacity of the plant in 2013 is [Urea 551,100 DAP 650,000]
tonnes. Recently, the company is aggressively pursuing diversification by
borrowing debt capital.
Website: www.ffbl.com
Plant Location: Karachi
Key Data:
The company is facing a declining trend in its earnings.
Earnings per share declined from Rs. 11.53 in 2011 to less than Rs. 6.00 in 2014. The plants urea production dropped from
433 thousand tonnes in 2011 to 224 thousand tonnes in 2013. Whereas, its
production of DAP is well above its design capacity.
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FFBL Key Data 2011-14
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2011
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2012
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2013
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Mar-14
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Jun-14
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Sep-14
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EPS
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11.53
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4.64
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6.01
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0.05
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0.81
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1.04
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UREA (TONNES)
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433,053
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281,068
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224,477
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22,000
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102,000
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158,000
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DAP (TONNES)
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662,304
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648,038
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744,436
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99,000
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297,000
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500,000
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Profitability:
During the period 2011-13, the company is facing tough
competition and resultantly the margin is declining. Gross Margin declined to
26.7% in 2013 from 36% in 2011. The net
profit margin also declined from 19.3% in 2011 to 10.3% in 2013 and the decline
in margin continues.
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FFBL Profitablity (2011-2014)
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2011
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2012
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2013
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Mar-14
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Jun-14
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Sep-14
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Gross Margin
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36.0%
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23.9%
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26.7%
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13.7%
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24.6%
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22.7%
|
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Operating Profit Margin
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30.9%
|
17.3%
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18.1%
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1.9%
|
13.4%
|
15.1%
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Net Profit Margin
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19.3%
|
9.1%
|
10.3%
|
0.8%
|
7.8%
|
7.5%
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Debt Profile:
The company is ever increasing its borrowing to finance
diversification of its businesses. The company investing in new businesses such
as banking, food and meat processing, power and so on. The company’s debt
burden is increasing as evident by the increase in financial cost and its
changing capital structure. The company is increasing its equity risk by
increasing equity investment.
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FFBL Capital
Structure and Debt and burden (2011-14)
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Leverage
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2011
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2012
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2013
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Mar-14
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Jun-14
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Sep-14
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Total Liability /Book
Equity
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1.95
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2.22
|
1.70
|
2.29
|
2.52
|
2.65
|
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LT Liability /Book Equity
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0.50
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0.39
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0.29
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0.34
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0.27
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1.06
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Operating Profit / Finance
Cost
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15.86
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4.55
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6.52
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2.75
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3.66
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3.07
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Dividend:
The company distributed Rs 4.5 and Rs 5.00 in year 2012 and
2013 respectively. The company also distributed an interim dividend of Rs 1.75
for the year ending December 2014.
Stock Price:
During the period January 2012 to November 2014, the stock
price of the company showed less volatility and traded around its average price
most of the time.
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Stock Price of FFBL (Jan 2012 – Nov 2014)
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Book Value
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Maximum
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Minimum
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Range
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Average
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STOCK PRICE
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13.34
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50.41
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35.91
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14.5
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40.51
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Conclusion:
The company is endeavoring for diversification by increasing
debt capital. This increases both risks and returns.
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