Engro Fertilizers Limited (EFERT) announced the financial result for 1QCY23 yesterday, posting a consolidated Profit after Tax (PAT) of PKR 4,404mn (EPS: PKR 3.30) compared to PKR 6,172mn (EPS: PKR 4.13) and PKR 6,409mn (EPS: PKR 4.80) in 1QCY22 and 4QCY22, respectively down by 29% YoY | 31% QoQ. In addition to the result, the company announced an interim cash dividend of PKR 3.50/share (PKR 5.50/share in 1QCY22).

Result Highlights

· Topline in 1QCY23 clocked-in PKR 43,991mn, up by 19% YoY given a surge in urea and DAP prices by 45% and 10% YoY, respectively. Meanwhile, DAP offtake plummeted by 21% YoY. Urea offtake, on the other hand, remained stable. On a sequential basis, the net sales reduced by 5% amid a fall in DAP sales by 56% QoQ.

· Gross margins arrived at 24.49% (down by 501bps YoY) in 1QCY23 on account of revision in prices of feed and fuel gas (as notified by OGRA to the companies on SNGP network) and delay in passing on the impact via higher urea prices.

· Other income depicted a jump of 40% YoY arriving at PKR 717mn in 1QCY23 owed to higher income from cash and cash balances. On QoQ basis, the other income plummeted by 30% due to the absence of a gain on scrap sales.

· Finance cost depleted by 8% YoY | 56% QoQ to PKR 435mn during 1QCY23 owing to decline in borrowings.

· The company booked effective taxation at 35% in 1QCY23 vis-à-vis 28% in 1QCY22. The taxation during the quarter includes 4% super tax levied on the profit before tax of 1QCY23

Courtesy – AHL Research