Fauji Fertilizer Company Limited ($FFC)

Ladies and gentlemen, on behalf of Fauji Fertilizer Company Limited, I extend a warm welcome to all to FFC's second corporate briefing for the year 2026. This briefing is being conducted in compliance with the Pakistan Stock Exchange notification regarding corporate briefing sessions by listed companies, and also to meet the eligibility criteria for the top 25 companies. We sincerely appreciate the participation of all our valued stakeholders who have joined us today through video conference. Intimation regarding this corporate briefing was duly shared with the Pakistan Stock Exchange on 20th April 2026. Ladies and gentlemen, the primary objective of today's session is to apprise you of the company's performance and provide an opportunity to interact, discuss and receive your valuable feedback on FFC's current operations and future business prospects. This briefing has been organized precisely in that context. Panel of FFC management present would be there to answer your queries. They will be pleased to respond to all your questions, and then we can have that concluding session. Now I would like to invite Mr. Atif Ali, Chief Financial Officer, to kindly apprise the house on company's performance.

Thank you very much, sir. Thank you, ladies and gentlemen, for taking your precious time out and joining this quarter-end corporate briefing. I think the times are very difficult. As everybody knows, there's a geopolitical situation going on. And despite difficult times, [Foreign Language], the company has delivered good results. For presenting, I request my colleague, Mustafa, to take you through the presentation. And during the course of presentation or by the end of when we'll have question and answers, so we'll respond to all your queries. Thank you. Let's begin.

Ladies and gentlemen, we welcome you to the second corporate briefing session. This is the flow of our presentation. That's how we're delivering our narrative. Towards the close of the first quarter, the geopolitical environment continued to impact the broader economic outlook of our country. The rising energy prices putting pressure on our import bill, fertilizer and phosphoric acid prices continue to rise at a faster pace. To curb inflation and macroeconomic stability measures, State Bank has increased policy rate by 1%. Keeping in view all these economic challenges, it appears that the agricultural growth target will be challenging. However, we expect that continual government support will enable the stabilization of this industry. On our end, we have delivered our operations efficiently, and we just have a 13% inventory share in our FFC urea inventory. Moving towards our business. We have a 32% uptick in our profitability, increase in sales, a handsome dividend from Thar Energy Limited. We have passed on a benefit of USD 300 million to the farmers. International price of urea at this point in time is around PKR 14,000 per bag. However, we are still selling well below the price at around PKR 4,400. Then we will talk about challenges, mainly melting out from the geopolitical unrest, as you are aware. There is a peak in the sulfur and phos prices. We'll be discussing it in the upcoming slide. Then we had a gas curtailment at the Port Qasim plant. However, we are pleased to share that the situation has pretty much been normalized. The overall impact of these economic issues will have a bearing on our operating cost, and we expect increase in our raw material packaging, freight and other inflationary costs. Now I will request CFO to brief the audience about the closure of Strait of Hormuz and its impact.

So the most important aspect as highlighted, the #1 challenge is the availability of sulfur and phosphoric acid. As you can see in the slide, sulfur is -- like 50% of the sulfur is produced in the Middle East region and 97% of that is transported through Strait of Hormuz. So because of the closure of the Hormuz, the sulfur is the most impacted, as you can see in the slide on the right side. And sulfur is the key component in the production of phosphoric acid. So the price of sulfur has skyrocketed from $300 in January to $1,100 as of we speak now. So the biggest challenge is, of course, at the Morocco, and we get the phosphoric acid from our supplier in Morocco. So the situation is that their cost is also going up, availability is a question mark, but we are in close coordination with them, and [Foreign Language], we are making sure that the availability is made sure by them. So that's one of the challenges on our hand. So this is the currently developing situation. We will keep you updated in the next corporate briefing as well. But [Foreign Language], this is a challenge on our hand, and we are addressing it well. So hopefully, this will be sorted out and we'll remain in production to supply DAP in the Kharif and Rabi season. Thank you.

Now moving towards our business, the Urea market segment. On overall year-on-year basis, an increase of 12% is very healthy. And we have also increased our market share, a good 9% increase. Then talking about the DAP segment, again, increase in our market share, we are there at 63% level, and a massive increase, almost 105% increase in our offtakes, depicting the growth in our DAP segment business. All this business performance is adequately reflected in our financials, a top line growth of 50%, bottom line PAT growth of 32%, a good other income mainly from Thar Energy Limited, augmenting our profitability. This is the breakup of how we earn our profit. 60% of the profit is earned from our fertilizer core operation and almost 40% is shared by the portfolio and strategic investments. Now moving towards the balance sheet, a strong balance sheet. Despite the heavy and healthy payout of dividend, our equity is at PKR 141 billion, PKR 175 billion short-term investment portfolio, a very manageable debt-to-equity ratio. On our financial performance of the group, 14% growth versus last year, a very healthy performance of FFC and its group entities. Now when we move towards our flagship project of Sona Centres, you can see a 100% increase in our sales through this initiative, of which we are pioneer. These Sona Centres are providing the urea to the farmers at affordable rates. Despite this, many other services such as satellite advisory, soil advisory and water testing facilities are also being available at these centers. We are very hopeful that these centers will be able to help our farmers and enable them to buy fertilizer at the company prescribed rates.

Just want to highlight here that you can see that our Sona Centres have increased from 100 to 246 by now. We have implemented hub-and-spoke model where 100 Sona Centres will feed the hub, will feed to 146 spokes. So we have increased our outreach to make sure that urea and DAP, which DAP currently, as I already highlighted, is a short commodity right now. And [Foreign Language], urea, the country has been like going through a long market since last year. And currently, as you can see, we are like almost around 1 million tonnes if we include the channel inventory. So that's boding well for the country. Mainly because of this geopolitical situation and it's -- so the urea price, as you can see, has skyrocketed, has doubled, like $400 to $800. So this is a model where we make sure that there is no price increase and we can increase our outreach and supply the fertilizer at MRP prices. So this is a continuous effort that we are putting in, and [Foreign Language], you will see a continuous growth in terms of sales or volume in terms of tonnage through Sona Centres.

So with this, I conclude this session, and we move forward towards the Q&A session. Over to Tabiha.

[Foreign Language]. Sir, first question is from Mr. Waleed Rathore. Can you provide a breakup of dividend received by company during first quarter. Other than AKBL, is the company expecting dividends from any of its other subsidiaries in the second quarter?

In the first quarter, we have received dividend from Thar Energy, as we have already explained, 5 billion in PKR terms.

Financial report for quarter shows the company offered trade discount of PKR 1.06 billion. Can you specify on which product was the discount offered? And how much was it?

Discounts. Basically, these discounts were offered on the last year's pending orders, because from 1st of Jan, we have eliminated all our discounts. So the discount on the pending orders that we took last year December, because you must remember that December was the highest offtake month in the history. We sold -- the industry sold around 1.3 million tonnes [Foreign Language], basically the outflow in 2026. So no additional discount you will see, [Foreign Language], in the coming months on top of that.

Next question is from Mr. Shankar Talreja. The consortium led by Arif Habib has exercised the option to purchase remaining 25% stake from government. Can you confirm, will this bring any change to FFC shareholding, or this additional shareholding will be given to any international aid bank?

As per our plan, we have given the confirmation. The call option we had to exercise. Our shareholding will remain the same, 34%. Overall, PIA, [Foreign Language], by the end of like April, May 2027, 100% will be owned by the consortium.

Sir, Zahed Mohiuddin is asking what is the deadline for PIA payment?

It's based on the CPs, [Foreign Language] from the government end. So once the CPs are completed, then the payment will be processed.

And is there additional debt required? And when will you be borrowing the same, regarding PIA?

Yes. As per our borrowing philosophy, basically, we borrow for our CapEx and for key investments. So we will draw some borrowing out of it. Of course, borrowing has been arranged. So [Foreign Language].

Sir, next question is from Mr. Hassan Javed. Does the management have any planned plant turnaround on any of its urea plant in the near term? If yes, what is the planned plant...

In the third quarter, we have turnaround of one of our plants, 15-odd days.

Given steep discount from international urea prices and increased domestic cost pressure, where can we see our urea price going ahead? Will discount be further curtailed?

Sorry?

Discount be further curtailed?

[Foreign Language] I've already mentioned that, [Foreign Language], but international prices have skyrocketed because of the closure of Strait of Hormuz. As you are aware, we have passed on a minor portion of the cost impact that we have, [Foreign Language], as you are well aware of it, urea prices. So of course, we have to be closely monitoring the situation. We can't continuously increase our prices. So hopefully, things -- we are hoping that things should settle down as early as possible. So the inflation is going to come and it's going to hit everyone, as it's hitting us right now. So we are going to take a very conscious decision because it's also the affordability of the farmers as well. So we constantly basically look into [indiscernible] situation and then decide accordingly.

Sir, how much dividend is expected to see from Thar Energy this year?

[Foreign Language] they are doing very good. Their profitability is good. So let's see.

Sir, how much production loss you are expecting for industry in 2026 for urea, as few plants are closed amidst RLNG disruption? I believe FFBL is also getting lower gas at the moment.

In FFBL, we have seen an impact of around 50,000 tonnes. So that's the impact for Qasim plant. [Foreign Language], so we are back on track. [Foreign Language], so we'll get that [Foreign Language] as well. As you all are aware, the industry has been shifted to Mari, and arrangements are being made to ensure continuous supply from Mari to all the industry, to all the plants. So that will take some time, [Foreign Language]. So there was suspension of gas for 1.5 months, so 10,000 tonnes or so has been lost. But not much. As I mentioned earlier, we have [Foreign Language] high inventory, so that's going to take care of the loss that we had.

Sir, have you passed on the impact of inflation and diesel price hike in urea prices?

Yes. As I mentioned, we have not fully passed on. We are closely monitoring the situation, because as soon as the matters, [Foreign Language], resolve soon, so it will take a few months to bring all the prices down, fuel prices, energy prices and things going to settle. So as I mentioned earlier, [Foreign Language]. [Foreign Language] if somebody wants to ask, then we'll close.

Sir, company has mentioned that PKR 5 billion has come from TEL. Was the rest of other income through its exposure in short-term investments, or did any other subsidiary contribute to the dividend income?

Askari and TEL, [Foreign Language]. Perfect. Thank you very much, ladies and gentlemen. I'll hand it over to [indiscernible] for the closing remarks.

Thank you very much, Atif sir and the participants. At the end, I would request all participants to share their feedback on the session through the feedback form available on the corporate notice briefing page of FFC corporate website. The link is also shared in the chat box. And thanks to all for once again attending the session. I close this session.

Thank you very much.