Corporate results: Engro Fert breathes sigh of relief as both plants online

Gas availability allows company to reverse losses.

KARACHI: Engro Fertilizers, a subsidiary of Engro Corporation, posted its financial results on its website, announcing a profit of Rs3.2 billion for the first nine months of calendar year 2013. This compares to a loss of Rs2.97 billion in the corresponding period last year, resulting in earnings per share of Rs2.77 for the current period, compared with a loss per share of Rs2.62 in the previous year.

The company was able to increase net sales by 78% to Rs34.4 billion, resulting in a 151% increase in net gross profits from Rs5.9 billion in the previous year to Rs14.8 billion in the first nine months of the current calendar year.

The increase in sales was mainly due to availability of gas for Engro’s EnVen plant. As a result of which, both plants owned by the company were operational in third quarter of the current calendar year. However, the supply of gas to the new plant is temporary, and analysts expect a reversion to its previous inactive state once the allotted time is over.

Engro Fertilizer also saw an increase of 188% in other income, which rose from Rs212 million to Rs611 million for the current nine month period. Conversely finance costs fell 15% from Rs8.1 billion to Rs6.9 billion.

On quarterly basis, the company’s profits stood at Rs1.8billion in the third quarter of calendar year 2013, as compared with a loss of Rs1.2 billion in the corresponding period last year. Profits almost doubled on a quarter on quarter basis, driven primarily by 31% higher urea sales due to gas availability for both plants.

Engro Fertilizer is one of the largest fertiliser producers in Pakistan. Its EnVen plant was the company’s biggest investment in the country, and the largest single train fertiliser plant in South Asia. However, the plant has not been supplied gas for long periods of time, resulting in massive losses for the company. The current reprieve, though temporary, was welcomed by investors, especially after Engro Foods, another subsidiary of Engro Corporation, posted lower than expected income.

Published in The Express Tribune, October 26^th, 2013.

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