Engro Fertilizers profit jumps 23%

Engro’s new urea plant EnVen starting operations in July, operate at only 40% of capacity amid severe gas curtailment.

KARACHI:

Engro Fertilizers has posted net profit increase of 23% to Rs4.59 billion in 2011 despite the manufacturers’ new plant facing multiple shutdowns during the year.

Higher earnings primarily stem from urea margins surging 6% to 53% and higher sales revenue, said Topline Securities analyst Farhan Mahmood.

Meanwhile, sales revenue jumped 66% to Rs31.35 billion in 2011 on the back higher urea prices and 33% increase in volumetric sales, added Mahmood.

Engro’s new urea plant EnVen after starting operations in July operated at only 40% of effective capacity amid severe gas curtailment, however, the old plant was immune to the curtailment. Resultantly, the industry decided to increase urea prices in the local market by over 100% to allow the business to meet its significant debt obligations, according to a BMA Capital research note.

However, financial charges increasing four-folds to Rs8.2 billion from Rs1.9 billion retarded profitability growth.

Alone in the fourth quarter, the company posted earnings per share of Rs1, 19% lower than the earnings of Rs1.23 in the preceding third quarter. The major reason behind decline in earnings is 21% fall in volumetric sales.

Hence the announcement of Engro Fertilizer earnings 2011 earnings shows that Engro Corporation profits will jump 23% on a yearly basis to Rs21.2 per share.

Published in The Express Tribune, February 9^th, 2012.