LAHORE - Total demand of urea for the Rabi season will be around 3 million tons across the country, while local estimated supply will remain in the range of 2.7 million tons, showing an estimated urea shortage of 3 million tons during Rabi season.

The federal government has decided to import 0.2 million tons of urea to avoid any shortage, further more if government decides to import more urea for the Rabi season then the price cuts by the company cannot be ruled out. Currently imported urea is available at subsidized price of 1,600/bag which is around 4 per cent cheaper than the retail price of FFC urea that is 1,640/bag.

Industry sources said that urea off-take declined by 13 per cent annually in 9MCY12 and 39 per cent QoQ in 3QCY12 that adversely affected FFC sales dragging it by 33 per cent YoY in 9MCY12 and 41 per cent QoQ in 3QCY12 respectively. While increase in urea prices by 11 per cent YoY provided some cushion to declining sales.

The board of directors of Fauji Fertilizer Company Ltd (FFC) met on Oct 21, 2012 to approve financial result of 3QCY12. The company recorded a profit after tax of Rs3,458 million in 3QCY12 which is in-line with expectation, taking 9MCY12 earnings to Rs 13,793 million, a modest decrease of 0.3 per cent YoY. Along with the result, the company declared third interim cash dividend of Rs2.5/share taking 9MCY12 payout to Rs 10.5/share.

As expected and discussed, other income declined by 35 per cent YoY in 9MCY12, due to absence of dividend income from FFBL. Other income is expected to increase as FFBL announced its first interim dividend of Rs2.25/share in 3QCY12 which will account for in 4QCY12 other income.