Engro Fertilizers Posts a Notable 59% Increase in Profit During H1 2018

Engro Fertilizers Limited (EFERT) has announced a comprehensive profit of Rs 6.52 billion for the first half of 2018, up by 59% compared to Rs 4.10 billion in the previous period last year.

Earnings per share (EPS) increased to Rs 4.88 compared to an EPS of Rs 3.07 in the period under review.

The increase in earnings is due to a rise in Urea and DAP prices. The results were in line with expectations, however, the Rs 4 cash dividend was a positive surprise.

The result was above the market expectations due to lower than estimated distribution and admin expenses and effective tax rate for the quarter.

The Top-line of the company augmented to Rs 30.14 billion in first half year versus Rs 27.31 billion during the same period last year. This increase in revenues is primarily attributable to higher Urea/DAP prices (+25%YoY/+82%YoY) coupled with improved pricing for both Urea/DAP (+3%YoY/ +20%YoY) as their Net Sales went up by 10.4%.

The gross margins of EFERT improved by a meager 2.0pps, to Rs 11.95 billion, up by 37.25% during H1CY18 as compared to Rs 8.7 billion in the corresponding period last year. An increment in margins was mainly due to the improved retention levels on both urea & DAP.

Furthermore, the company’s Other Income dropped by 39% while Finance cost reduced by 32%.

EFERT’s script at the bourse was trading at Rs 80.50, down by Rs 0.92 with a turnover of 3.42 million shares.

Financial Results for the Half Year Ended June 30th 2018 (Rupees)
Jun-18 Jun-17 % Change
Net Sales 30,141,488 27,311,019 10.36%
Cost of Sales (18,190,476) (18,603,290) -2.22%
Gross Profit 11,951,012 8,707,729 37.25%
Selling and Distribution Expenses (2,762,551) (3,152,943) -12.38%
Administrative Expenses (490,340) (441,403) 11.09%
Other Income 1,976,290 3,274,706 -39.65%
Other Operating Expenses (572,654) (621,610) -7.88%
Finance Cost (876,561) (1,300,055) -32.58%
Profit before Taxation 9,225,196 6,466,424 42.66%
Taxation (2,703,688) (2,364,376) 14.35%
Profit after Taxation 6,521,508 4,102,048 59%
Earnings per share – basic and diluted 4.88 3.07 58.96%