Engro Fertilisers’ profit contracts 4% to Rs5.5b


Engro Fertilisers reported a 4% decline in profit after tax to Rs5.5 billion for the first quarter (January-March) of calendar year 2022 in the wake of a significant increase in finance cost.

According to a notice sent to the Pakistan Stock Exchange, the urea producing firm recorded a profit after tax of Rs5.7 billion in the same period of previous year.

Earnings per share of the company dropped from Rs4.3 in January-March 2021 to Rs4.13 in January-March this year.

Alongside the result, the company announced an interim cash dividend of Rs5.5 per share. It had paid a dividend of Rs4 per share in the first quarter of 2021.

During the quarter under review, net sales amounted to Rs36.8 billion, which was 25% higher than Rs29.4 billion recorded in the corresponding quarter of previous year.

“Topline in first quarter of 2022 rose amid surge in urea and di-ammonium phosphate (DAP) prices by 13% and 96% year-on-year respectively followed by a 5% growth in DAP offtake,” said Arif Habib Limited analyst Muhammad Iqbal Jawaid. “Meanwhile, urea offtake fell by 11%.”

Gross margins stood at 29.5% (down 975 basis points year-on-year) in the first quarter of 2022 as the industrial feed gas rate accrued at the company’s EnVen plant since the concessionary gas period ended on June 30, 2021.

Selling and distribution expenses rose 10.27% to Rs2 billion in the January-March 2022 quarter. The company had paid Rs1.8 billion under the same head during January-March 2021.

Similarly, administrative expenses increased from Rs411.5 million in the first quarter of 2021 to Rs449.1 million in the same quarter of current calendar year, a rise of 9.1%.

Other income rose 7% to Rs511 million in January-March 2022 against Rs479 million in the corresponding months of 2021.

“Other income depicted an increase owing to higher income from cash and cash balances,” Jawaid said.

Finance cost rose by a substantial 76.4% to Rs475 million in the January-March period of 2022. The company paid Rs269 million under the same head in the corresponding period of last year.

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