Engro Fertilizers makes Rs2.9b profit in Q3

Declares Rs2.5 per share as interim dividend


Our Correspondent October 25, 2016
Engro Fertilizers CEO says excessive commodity can be exported. PHOTO: REUTERS

KARACHI: Engro Fertilizers has announced a net consolidated profit of Rs2.9 billion for the third quarter ended September 2016, up 7.4% compared with Rs2.7 billion in the same quarter of previous year, according to a company notice sent to the Pakistan Stock Exchange (PSX).

Earnings per share increased marginally to Rs2.2 in Jul-Sept 2016 from Rs2.1 in Jul-Sept 2015.

The share price of Engro Fertilizers advanced 1.85% and closed at Rs63.32 at the PSX on Tuesday. However, the benchmark KSE 100-share Index ended the day down 87 points or 0.21% at 40,764 points.

“This result is below consensus market estimates,” commented a Topline Securities report.



It was accompanied by an interim dividend of Rs2.5 per share, which was higher than expectations. This takes the nine-month (9M2016) dividend to Rs4.5 per share.

In the third quarter (3Q2016), revenues of the company rose 33.3% year-on-year to Rs18.6 billion, which came primarily on the back of increase in urea sales to 497,000 tons in the quarter compared with 361,000 tons in the same period a year earlier.

Sales of di-ammonium phosphate rose to 111,000 tons against 32,000 tons last year in the wake of subsidy measures taken by the government.

Similar to other fertiliser manufacturers, Engro had recorded a 43% fall in urea off-take in the first half of 2016. A delay in demand during the period was a major cause of sales growth in the third quarter.

Gross profit of the company fell 26% to Rs4.9 billion in 3Q2016. After adjustment for subsidy, gross margins fell 13 percentage points year-on-year to 35%.

Other income rose to Rs2.3 billion in 3Q2016 compared with Rs174 million in the same period of previous year. It came as a post-subsidy phenomenon as subsidy disbursements were categorised in that section.

During 9M2016, revenues decreased 22% year-on-year due to lower urea prices and a 21% fall in urea off-take. Such factors had been the major cause of lower profitability, which fell 40% to Rs5.7 billion (EPS Rs4.3) in the period.

“Short-lived impact of the subsidy, imposition of gas infrastructure development cess on concessionary gas and lack of improvement in agronomics are key risks for the company,” the Topline report said.

Published in The Express Tribune, October 26th, 2016.

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