To recall, the EFERT posted a consolidated net profit of PKR 5,464mn (EPS: PKR 4.09) in 1HCY23 compared to PKR 5,413mn (EPS: PKR 4.05) in 1HCY22, up by 1% YoY. The company’s urea market share declined to 33% in 1HCY23 from 34% in 1HCY22. The urea sales reduced by 6% YoY to 1,034k tons in 1HCY23.
The management iterated that the base plant faced a 21-day outage in May’23, which resumed operations in Jun’23. On a question raising concerns over frequent outages, the management informed that all the outages were unique and were not connected or following any pattern. Despite the outage, the company’s urea production in 1HCY23 remained stable at 1,115k tons.
The company’s DAP market share reduced to 18% in 1HCY23 vis-à-vis 21% in 1HCY22.
The company expects the industry’s urea and DAP demand towards end of CY23 to be 6.5mn tons and 1.3mn tons, respectively.
The management shared that PP12-based feed and fuel gas prices is USD 5.7/mmbtu.
The management highlighted that the government has increased FED by 5% by Finance Act 2023, as a result of which the company increased urea prices by PKR 150/bag. Moreover, the company has increased the dealer price on urea from PKR 25/bag to PKR 125/bag. As a result, the urea price currently stands at PKR 3,169/bag (previously PKR 2,994/bag) while the international landed price is PKR 6,372/bag.
On a question regarding BMR, the company informed that there are no plans of any BMR in 2HCY23.
Regarding super tax, the management informed that in 2QCY23, the 6% super tax was charged on CY22, 1HCY23 and deferred tax (PKR 1.5bn). Moreover, the company is consulting lawyers and contemplating whether to challenge the additional super tax in a court of law or not.
The management said that the global DAP prices have reduced significantly. Still, the continued devaluation of PKR against USD prevents the complete benefit from being passed on to the final consumers. Moreover, the government has imposed 5% FED and 5% GST on DAP, the impact of which has been passed on by the company raising DAP prices to PKR 10,112/bag from PKR 9,780/bag.
Regarding the concessionary gas extension case, the company told that there is no progress as yet, and the stay order from Sindh High Court still holds.
The company’s sales tax refund has reached PKR 12.2bn by Jun’23. Whereas subsidy receivable stands at PKR 6.5bn.
Courtesy – AHL Research