SAFCO’s Q1 2019 misses estimates: Aljazira Capital

Saudi Arabia Fertilizers Co.’s (SAFCO) net income of SAR 335.5 million for Q1 2019 narrowly missed Aljazira Capital’s estimate of SAR 341.2 million, but was above the consensus estimate of SAR 293 million, the brokerage said in an earnings review.

The year-on-year growth is mainly attributed to decrease in COGS and OPEX as a result of organizational restructuring during Q1 2018 and higher contribution from IBN-ALBAYTAR. However, the quarter-on-quarter (QoQ) weak result was due to the impact of scheduled maintenance of SAFCO 3 and weak Urea prices.

The company reported a revenue of SAR 718.7 million, significantly missing the brokerage's estimate of SAR 898.7 million due to lower than expected volume as a result of SAFCO-3 turnaround.

Gross profit stood at SAR 378.3 million, up 45.3 percent QoQ, coming lower than the brokerage's estimates of SAR 425 million due to weaker top line.

Aljazira Capital maintained its “neutral” rating on the stock, setting the target price at SAR 73.50 a share.