Engro Fertilizers (EFERT) announced its 3Q2023 financial result today, where the company recorded highest ever consolidated quarterly profit of Rs9.6bn (EPS: Rs7.17) up 129% YoY. It takes 9M2023 earnings to Rs15bn (EPS: Rs11.27) up 57% YoY.

Alongside result, EFERT announced interim cash dividend of Rs6.0/share, taking cumulative dividend in 9M2023 to Rs12.5/share.

3Q2023 result came higher-than-industry expectations due to higher than estimated net sales.

Net Sales of the company increased by 85% YoY to Rs66bn due to jump in Urea and DAP offtake by 54% YoY to 655k and 63% YoY to 84k tons, respectively. Additionally, higher retention price also played role in boosting net sales.

Gross Margins increased by 4.9ppts YoY to 31.7% in 3Q2023, which came in line with our expectations.

Selling and Distribution expenses increased by 56% YoY due to increase in volumetric sales of Urea and DAP.

Other Income increased by 260% YoY to Rs737mn in 3Q2023 due to higher interest income. However, we are awaiting detailed accounts for further clarity.

Despite higher interest rate, finance cost declined by 14% YoY and 29% QoQ possibly due to loan retirement, we believe.

Effective tax rate clocked in at 39% in 3Q2023 vs. 33% in 3Q2022 and 85% in 2Q2023.

Courtesy – Topline Pakistan Research