Corporate results: Engro Fertilizers profit jumps 111%

Acquisition of Eximp, availability of cheap gas aid revenues

KARACHI: Earnings of Engro Fertilizers amounted to Rs7.1 billion in the first six months of 2015, up a massive 111% from the net profit of Rs3.3 billion in January-June 2014, a stock filing said on Monday.

This massive increase in profit is mainly due to the acquisition of Engro Eximp, previously a standalone subsidiary of Engro Corporation, and availability of gas at a concessionary rate to the Enven fertiliser plant after March, Global Securities research analyst Asad Raza Nayani said in a note to clients.



The acquisition of Engro Eximp increased the revenue of Engro Fertilizers 38% to Rs38 billion at the end of the six-month period. “Despite the imposition of the super tax of 3% during the second quarter, the effective tax rate for the first half of 2015 was 25% as opposed to 31% recorded in the corresponding period of 2014,” Nayani said.

Engro Fertilizers also announced an interim cash dividend of Rs1.50 per share with the half-yearly results.

A continuous decline in the benchmark interest rate to 7% also helped the company to reduce its finance costs. The analyst attributed the decline of 23% in the finance cost to the reduction of 300 basis points in the key interest rate since November 2014 along with deleveraging initiatives that Engro Fertilizers undertook in the January-June period.

Published in The Express Tribune, August 11^th,  2015.

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