Engro Fertilizer followed its peers and switched to a loss making regime amid significant decline in gas supply during the first three months of the current year.
The local conglomerate posted a net loss of Rs1.4 billion against a net profit of Rs1.4 billion during January to March 2012, according to details released on its official website.
The availability of subsidised imported urea and gas shortage has dented sales of urea – the most widely used fertiliser –by approximately 68%, said Topline Securities analyst Farhan Mahmood. Core problem of the local conglomerate was gas shortage which restricted production from its EnVen plant and resulted in a lower share in industry sales of 11%.
In a similar scenario, fellow manufacturer Fauji Fertilizer Bin Qasim witnessed its worst quarter in more than three years during January to March 2011 by posting a net loss of Rs387 million due to gas shortage and annual maintenance.
Local fertiliser manufacturers came second best to their imported counterparts during the period under review as price of imported fertiliser stood much lower due to partial payment made by the government for them in the form of subsidies.
The government’s reliance on imports has eased the demand of the commodity for now, however, this will hit the country’s fiscal management hard as the fertiliser import bill reached $848 million during the first seven months of the current financial year against a total of $300 million during same period last year.
Moreover, increase in financial charges to Rs2.7 billion from Rs0.5 billion also dragged profitability as new plant came online in later part of last year.
With Fertiliser, Foods and Polymer subsidiary results announced, overall Engro Corporation is estimated to have a dismal outing with earnings per share around Rs0.10-0.4 per share compared with earnings of Rs4.0 per share last year, added Mahmood.
Published in The Express Tribune, April 25th, 2012.
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