The earnings included a one-off gain of Rs2.7 billion, courtesy accounting adjustment with regards to adjustment in GIDC liability under IFRS-9. This was offset by Rs2.8 billion additional impairment booked on Fauji Meat and Fauji Foods (cumulative Rs4.08 billion for CY20).
Apart from one-offs, the result was broadly in line with market expectation, slight deviation can be attributed to higher than expected Other Income.
The turnaround in 4QCY20 earnings came on the back of: 1) a 59%YoY uptick in DAP volumes, along with uptrend in local DAP prices, 2) decline in feed/ fuel gas prices by 50 and 30% YoY respectively, 3) GIDC elimination and 4) a 45%YoY decline in finance cost amid lower interest rates.
On full year basis, GIDC elimination in January 202-2, uptick in urea and DAP offtake and higher prices of DAP made the bottom-line green.
FFBL has a 90% stake in Fauji Meat and 51% stake in Fauji Foods. While core operations have improved, with supply side shock posing to be beneficial for the only local producer of DAP, the loss making subsidiaries continue to remain a drag.