Back on track: Engro Fert back in black with Rs5.49b profit

Better production at Enven plant lifts bottom line.

KARACHI:

Engro Fertilizer − part of Pakistan’s largest conglomerate Engro Corp − returned to profit and posted net earnings of Rs5.49 billion for the year ended December 31, 2013 compared to a loss of Rs2.93 billion in the previous year.

Earnings per share (EPS) rose to Rs4.66 against a loss per share (LPS) of Rs2.59 in the previous year.

Sales of the company jumped by a significant 64% to Rs50.12 billion compared to Rs30.62 billion in 2012.

The growth in earnings is primarily attributable to better production at Engro’s Enven plant, which was shifted to the Mari gas system. Moreover, gas supply from Guddu gas field increased after July 2013.

According to Engro, both plants of the company run at around 80% of capacity for most part of the second half (July-December) of the year. It is because of this reason that Engro reported urea off-take at 1.56 million tons, up 66% compared to 0.94 million tons in 2012.



Owing to continuous operations since July, higher operational efficiencies enhanced gross margins by 12 percentage points to 44% in 2013 from 32% a year earlier.

Moreover, other income increased two times to Rs1.1 billion while financial charges dropped 19% to Rs8.7 billion, lending support to the bottom line of the company.

On a quarterly basis, profit stood at Rs2.3 billion (with EPS at Rs1.74) in the fourth quarter compared to profit of Rs43 million (with EPS at Rs0.03) in the same quarter of 2012.

With improved profitability, the company recently decided to go for an initial public offering (IPO), which was oversubscribed four times.

In 2013, the urea industry grew 13% after a downturn in 2012. Urea production jumped to 5.90 million tons in 2013 compared to 5.23 million tons in 2012.

This growth was mainly attributable to the better conditions of major crops while weather also remained favourable, casting a positive impact on urea demand.

Published in The Express Tribune, February 8^th, 2014.

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