Engro Fertilizer quarterly profit surges

KARACHI: Engro Fertilizer Limited’s (EFC) said on Friday its net profit surged 31 percent in the quarter ended June 30 due to lower selling and distribution expenses and financing cost.

EFC’s profit amounted to Rs 3.259 billion with earnings per share (EPS) of Rs 2.44 in April to June period as against Rs 2.478 billion with EPS of Rs 1.85 in the corresponding period a year earlier.

The company declared an interim dividend of Rs 4/ share or 40 percent for the half year ended June 30, 2018.

Finance cost during the quarter ended went down 42 percent to Rs 362 million during the period under review.

“The financing cost of the company also declined as it retired short-term borrowings by utilising surplus cash, arising out of accrual of Gas Development Surcharges,” said Shanker Talreja, analyst at Topline Securities.

“Other income was down 75 percent to Rs 509 million as company recorded subsidy on urea for half of the quarter (as prices of urea were increased on May 7, 2018). Further, absence of cash subsidy on DAP is also another reason behind lower other income.”

Talreja said rupee depreciation, regulatory control on fertilizer industry, poor crop season and unfavorable decision related to GIDC as key risks to the company’s earnings forecast.

Analyst Amin Hamdani at Habib Metro-Financial Services said a further hike in prices due to rupee depreciation and increase in international prices helped EFERT and other fertiliser manufacturers.

“Urea and DAP prices increased by Rs 98/bag and Rs 163/bag in the second quarter of 2018,” he said.