Saudi Arabian Fertilizer Company (SAFCO) posted a net income of SAR 237 million for Q1 2018, missing both Riyad Capital’s and market expectations of SAR 416 million and SAR 392 million respectively, the research firm said in a recent report.
The profit miss was due to higher costs registered in COGS (cost of goods sold) as well as elevated operating expenses. In addition, the decrease in company share from Ibn-Baytar profit also contributed negatively towards earnings.
SAFCO’s Q1 revenue recovered after the scheduled shutdowns last quarter and stood at SAR 811 million, increasing by 32 percent quarter-on-quarter (QoQ) but decreasing by 4 percent year-on-year (YoY).
“The main driver for this recovery on a quarterly basis is the increase in volume produced due to higher operating levels, despite the decrease in urea prices,” Riyad Cap said.
The brokerage maintained expectations for better outlook in 2018, and reiterated a “neutral” rating on the stock with a target price of SAR 65.
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