Fertiliser sales up 38% in November
The increase in sales came in the wake of revived demand and pre-buying by farmers in anticipation of price hikes, said analysts.
However, di-ammonium phosphate (DAP) sales declined by 36 per cent year-on-year (YoY) to 180,000 tons, according to data released by the National Fertiliser Development Centre.
Urea and DAP are two widely used fertilisers in the country. In 11 months of 2010, fertiliser sales registered a decline of two per cent to 7.8 million tons with DAP and urea sales both falling due to the slowdown following floods. The key feature of November data is strong urea sales by both Fauji Fertiliser Company (FFC) and Engro as shown in the graph. Fauji Fertiliser Company’s urea sales surged to 415,000 tons in November, more than the company’s entire third-quarter (July-August) sales.
DAP slowdown to continue
A major factor behind the fall in DAP demand has been the 23 per cent increase in its prices during the year, said JS Global Capital analyst Bilal Qamar.
In November, DAP offtake declined by 36 per cent YoY and 52 per cent month-on-month (MoM) to 180,000 tons. The MoM decline is largely on account of pre-buying in October on price increase fears.
Sales are expected to slow down further as fertiliser manufacturers have enhanced prices again by Rs100 per bag during December.
According to company-wise breakup, Fauji Fertiliser Bin Qasim (FFBL) sales rose by 41 per cent to 71,000 tons while Engro sales declined by 50 per cent to 32,000 tons during November.
Robust earnings on the cards
The entire fertiliser sector’s earnings are expected to firm in the fourth quarter of 2010 with recent volume recovery coupled with strong profit margins for both urea and DAP.
Key risk, meanwhile, is an increase in gas supply cuts, stretching producers in terms of pass-through ability and plant efficiency. FFC is expected to lead the sector’s growth with an increase of Rs5.34 per share and Rs5 cash payout. Engro will follow with Rs3.86 per share and FFBL with Rs2.01 per share along with Rs2 per share cash payout.
Published in The Express Tribune, December 29th, 2010.
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