IMS Research recently reviewed Engro Fertilizer Ltd’s (EFERT) fiscal performance for 2QCY25. EFERT reported NPAT of PKR 5.6 billion (EPS: PKR 4.17), which is a significant increase of 3.3x YoY and 92% QoQ, largely due to a 40% increase in Urea offtake. The company declared an interim cash dividend of PKR 4.25/sh, totaling PKR 6.25.
Key Takeaways:
– EFERT’s Urea market share rose to 34% in 2Q, aided by competitive pricing despite higher gas costs. The upcoming Rabi season is expected to alleviate Urea inventory pressures.
– The DAP segment faced challenges due to rising international prices, limiting the company’s ability to pass costs to consumers and resulting in losses in 1QCY25.
– Other income increased significantly due to a gain on the sale of an aircraft.
– The US$300 million Production Enhancement Facility project is on track, with Phase 1 expected to be completed by August 2025.
– Four operational Engro Markaz in Punjab are delivering fertilizer directly to farmers, with plans for further expansion.
**Outlook:**
Management anticipates continued depressed fertilizer offtake due to the lack of support prices for crops and climate change impacts. Despite high working capital needs, they remain confident in maintaining a 100% payout policy, subject to Board approval.
