Engro Fertilizers Limited (EFERT) announced its 3QCY20 earnings of PKR 5.27/sh, up 1.81x/2.11x QoQ/YoY, taking 9MCY20 profitability to ~PKR 11.5Bn (EPS: PKR 8.61/sh).

The result was accompanied by a dividend of PKR 5.0/sh. Increase in profitability can mainly be attributed to higher tax benefit booked in 3QCY20. Excluding the impact of tax benefit, the earnings would have been reported at PKR 3.83/sh.

Net sales were recorded at PKR 37.4Bn as against PKR 29.9Bn in 2QCY20, up 25%/38% QoQ/YoY. Improvement in topline is largely on the back of: i) higher DAP/Urea off-take in 3QCY20, and ii) uptick in average NP/DAP prices by 8%/3% QoQ.

The company reported gross profit of PKR 10.8Bn in 3QCY20, up 4%/23% QoQ/YoY. As expected, gross margins show a decline of 6.0ppts at 29%, on account of higher proportion of DAP volumes in sales mix in 3QCY20.

Other income of the company clocked in at PKR 0.50Bn, up 106% QoQ. Additionally, finance costs witnessed a decline of 27%/46% QoQ/YoY to PKR 0.65Bn, mainly on the back of lower interest rates. (
BMA Capital Management Ltd.)