Ayesha Mudassar

Engro Fertilizers Limited (EFERT) reported significant growth in the first half of the ongoing calendar year 2024 (1HCY24) with net sales increasing by 37%, gross profit by 10%, and net profit jumping by 73% compared to the corresponding period of the last year, according to WealthPK. For the first half of CY24, the company recorded net sales of Rs113.2 billion and a gross profit of Rs24.3 billion. The net profit jumped to Rs9.4 billion from Rs5.4 billion in the same period last year, resulting in the earnings per share (EPS) of Rs7.06 versus Rs4.09 in 1HCY23.

Going by the unconsolidated results, EFERT's cost of sales grew by 48% year-on-year (YoY) to Rs88.8 billion from Rs60.1 billion in 1HCY23. On the expense side, the company’s administrative costs surged by 109% YoY and other operating expenses by 27% during the period under review. The company’s finance cost also increased by 22% YoY to Rs1.3 billion from Rs1.1 billion in 1HCY23. On the tax front, the company paid a significantly lower tax worth Rs5.2 billion against Rs8.4 billion paid in the corresponding period of last year, depicting a decline of 38% YoY.

Sectoral financials -- 1QCY24

In the first quarter (January-March) of the ongoing year, Pakistan's fertilizer companies posted a remarkable 81% increase in gross profit and a staggering 172% growth in net profit compared to the corresponding period of 2023. In 1QCY24, the listed fertilizer firms collectively earned a gross profit of Rs71.2 billion and a net profit of Rs31.7 billion, resulting in gross profit and net profit margins of 31% and 14%, respectively. This substantial growth can be attributed to higher production and sales volume of urea and diammonium phosphate (DAP) fertilizers.

According to the results available with WealthPK, the fertilizer sector’s net sales jumped 62% to Rs223.9 billion in 1QCY24 from Rs138.4 billion in the same period of CY23. The fertilizer sector comprises EFERT, Fauji Fertilizers Company Limited (FFC), Fatima Fertilizer Company Limited (Fatima), and Fauji Fertilizer Bin Qasim Limited (FFBL). EFERT leads the sector with a market capitalisation of Rs250.7 billion followed by FFC at Rs267.1 billion. Fatima and FFBL rank third and fourth with market capitalisation of Rs122.4 billion and Rs60.1 billion, respectively.

Company profile

Engro Fertilizers is a public company incorporated in Pakistan on June 29, 2009, as a wholly owned subsidiary of Engro Corporation Limited. The company is engaged in the manufacturing, purchasing, and marketing of fertilizers, seeds, and pesticides and offering logistics services.

Near-term outlook

The company is committed to collaborating with the industry and the government to ensure continuous urea production. In response to declining gas pressures, Fauji Fertilizer Company and other producers have agreed with Mari Petroleum Company Limited (MPCL) to invest in pressure enhancement facilities at MPCL’s delivery node. The project is expected to require substantial capital outlay and aims to secure sustained gas supplies for fertilizer manufacturers.

Credit: INP-WealthPk