Engro Fertilizers’ profit soars 256% to Rs2.48b

Company declares interim cash dividend of Rs2.5 per share

KARACHI: Engro Fertilizers, a subsidiary of Engro Corporation, which is one of the largest conglomerates in Pakistan, reported a net profit of Rs2.48 billion in the quarter ended June 30, 2017, up 256% compared to Rs696 million in the same period of previous year, which was in line with analysts’ expectations.

Earnings per share improved to Rs1.85 in April-June 2017 compared to Rs0.52 in the same period of previous year.

Along with the result, the company declared an interim cash dividend of Rs2.5 per share, which was higher than anticipated.

The KSE-100 Index closed at 46,877, down 206 points or 0.44%, on Friday whereas Engro Fertilizers’ stock closed up 3.4% at Rs60.02.

The company registered sales growth of 66% year-on-year and 71% quarter-on-quarter, driven by 127% year-on-year and 104% quarter-on-quarter higher urea sales, which reached 550,000 tons due to government subsidy.



Gross profits surged 117% year-on-year as margins increased seven percentage points to 30% due to higher urea sales along with a higher proportion of its own manufactured fertiliser sales (di-ammonium phosphate (DAP) volumes fell 8% year-on-year).

Operating profit surged 143% to Rs3.2 billion as selling, distribution and administration expenses as a percentage of sales were restricted to 12% compared to 11% last year.

Other income grew 91% year-on-year, driven by higher income from sales under the government subsidy programme.

In the first half (Jan-Jun) of 2017, revenues of the company posted a growth of 23% year-on-year, despite 55% higher urea off-take to 819,000 tons, due to lower urea prices.

Urea prices averaged Rs1,350 in the first six months of 2017 compared to Rs1,806 last year.

Gross profits increased 32% year-on-year to Rs8.8 billion on the back of higher gross margins, which came in at 32% compared to 30% last year.

This is likely due to higher proportion of in-house fertiliser sales as the urea-to-DAP sale ratio surged to 8.6 times compared to 4.3 times last year.

Published in The Express Tribune, August 5^th, 2017.

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