KARACHI - The fertiliser sector profits down by 15.1 per cent in the first half calendar year 09 due to the resurged DAP sales driving and rising finance cost, The Nation was told. According to the details, the effect of improved DAP volumetric sales (+172 per cent Year on Year) in 1HCY09 failed to spur the growth in the fertiliser sectors bottomline, which shrank by 15.1 per cent YoY (on an adjusted basis) to Rs4.9billion during 1HCY09. FFC was the only company amongst the listed ones which showed improved bottomline during 1HCY09. The sector topline grew by 45.0 per cent YoY to Rs45.9bn, driven largely by revitalised DAP sales by 172 per cent YoY owing to reduction in DAP prices which prompted the farmers to rationalise the usage of DAP, Surge in urea prices, offsetting a decline in volumetric sales (7 per cent YoY), told a report. Amongst the listed companies, FFBL, being the only DAP producer, was the chief beneficiary of the said factors. FFBLs DAP sales recorded a growth of 207 per cent YoY, translating into topline growth of 164.3 per cent YoY, highest within the sector, it was further. Moreover, the sectors gross profits rose by 22.6 per cent YoY to Rs14.9bn, whereas gross margins (GMs) shrank by 5.9pps YoY to 32.4 per cent. While the reduction was due to the increased proportion of relatively low-margin DAP in sales mix and high carry-over inventory recorded at higher prices. FFC enjoyed highest GMs amongst peers (45.1 per cent, +1.0pps YoY) while FFBL recorded the greatest rise in gross profits (+93.8 per cent YoY to Rs2.9bn). On the other hand, the suppressed urea sales were also reflected into reduced urea production for the said period. Sectors urea production declined by a mere 0.6 per cent YoY to 2.0mn tons, with a capacity utilisation standing at 105.9 per cent (-70bps YoY). Despite this decline, FFC capacity utilisation increased to 130.8 per cent (+580bps YoY), underscoring its status as the most efficient urea producer in the sector. On the other hand, resurgence in the DAP production spurred the increase in DAP production by 42 per cent YoY to 213k tons. Cumulative financial costs for the sector rose by a significant 58.3 per cent YoY to Rs2, 883 million, and high carry-over DAP inventory increased the working capital requirements. FFC recorded the highest increase of 126 per cent YoY in financial costs primarily due to low base-effect, however, the burnt of this increased was felt by others as well, as the improved topline performance was mitigated due to surge in financial cost (ENGRO +60 per cent, FFBL 72 per cent YoY). Sectors other income was recorded at Rs1,960 million depicting a decline of -2.7 per cent YoY.