Engro Fertilizers Limited (EFERT) announced the financial result for 9MCY22 today, posting a consolidated profit after Tax (PAT) of PKR 9,595mn (EPS: PKR 7.19) compared to PKR 14,921mn (EPS: PKR 11.17) in SPLY owed to super tax imposed on the profit before tax of CY21 and 9MCY22 coupled with hefty deferred tax adjustment. Whereas, consolidated earnings in 3QCY22 settled at PKR 4,182mn (EPS: PKR 3.13), down by 5% YoY. In addition to the result, the company announced a cash dividend of PKR 3.00/share (PKR 8.50/share in 9MCY22).

Result Highlights

· Topline in 9MCY22 clocked-in PKR 110,876mn, up by 20% YoY amid surge in urea and DAP prices by 24% and 94% YoY, respectively. Meanwhile, urea and DAP offtake went down by 13% and 18% YoY, respectively. On quarterly basis, the net sales during 3QCY22 arrived at PKR 35,739mn, down by 4% YoY on the back of 26% and 50% decline in urea and DAP offtake, respectively due to heavy rains and flash floods across the country during the quarter.

· Gross margins in 9MCY22 arrived at 29.14% compared 33.45% in SPLY as the company accrued industrial feed gas rate at the EnVen plant since concessionary gas period ended on 30th Jun’21. Whereas, gross margins arrived at 24.73% (up by 157bps YoY) in 3QCY22 owed to higher urea prices and better trading margin on DAP.

· Other income depicted fall of 55% YoY arriving at PKR 1,304mn in 9MCY22 owed to decrease income from cash and cash balances. During 3QCY22, the other income came out to be PKR 205mn due to significant decline in short term investments.

· Finance cost climbed up by 30% YoY to PKR 1,640mn during 9MCY22 given higher interest rates. Meanwhile, the finance cost in 3QCY22 ascended by 37% YoY, reaching PKR 582mn owed to higher short term borrowings and interest rates.

· The company booked effective taxation at 33% in 3QCY22 vis-à-vis 30% in 3QCY21.The taxation during the quarter includes 4% super tax levied on the profit before tax of 3QCY22

Courtesy – AHL Research