Engro Fertilisers’ profit surges 24% to Rs4.8b

Engro Fertilisers’ profit jumped 23.8% to Rs4.8 billion in the quarter ended June 30, 2021 on the back of a surge in other income and dip in finance cost.

According to a notice sent by the company to the Pakistan Stock Exchange on Thursday, the fertiliser manufacturer had reported a profit of Rs3.9 billion for the same quarter of last year.

Accordingly, the earnings per share (EPS) of the firm rose from Rs2.91 during April-June 2020 to Rs3.6 in the quarter under review.

Alongside the result, the company announced a cash dividend of Rs4 per share.

Net sales of the enterprise amounted to Rs25.9 billion in the April-June 2021 quarter, which was 13.35% lower than the Rs29.9 billion recorded in the corresponding period of previous year.

“Net sales during the quarter declined amid reduction in urea and di-ammonium phosphate (DAP) offtake by 22% and 48% respectively on a year-on-year basis,” said Arif Habib Limited analyst Iqbal Jawaid.

He added that gross margins came in at 38.01%, up by 538 basis points year-on-year, in the second quarter of calendar year 2021 owing to higher urea prices.

Selling and distribution expenses of the fertiliser manufacturer contracted 14.1% as they fell from Rs2.4 billion in April-June 2020 to Rs2 billion in April-June 2021.

Administrative expenses amounted to Rs494.7 million in the quarter under review, which were 36.7% higher than Rs361.8 million in the corresponding quarter of previous year.

Other income of the company more than doubled to Rs533.6 million in the second quarter of 2021. The income under this head had been Rs243.5 million in the same period of previous year.

“Other income showcased a hefty growth of 119% year-on-year due to higher income from cash and cash balances,” the analyst said.

Engro Fertilisers’ other operating expenses dived 63% to Rs452 million in April-June 2021. The cost under this head had stood at a substantially higher level at Rs1.2 billion in the corresponding three months of 2020.

Finance cost of the company showed a decline of 36.3%, falling from Rs895.8 million in the April-June quarter of previous year to Rs570.5 million in the quarter under review.

“Finance cost dropped due to a fall in interest rates,” the analyst pointed out. “The company booked effective taxation at 28% in 2QCY21 vis-à-vis 33% in 2QCY20.”

Engro Fertilisers’ share price closed at Rs75.23 on Thursday after a gain of Rs0.86 with 3.26 million shares changing hands at the Pakistan Stock Exchange.