Engro Fertilisers (EFERT) reported a net profit of Rs3.9 billion or Rs2.9 per share for the quarter ended June 2020.
The profits were up by 22% compared to Rs3.1 billion or Rs2.38 per share earned in the same period last year, the company’s financial results revealed on Thursday.
The country’s fertilizer manufacturing company saw its revenue increase by 11% to Rs30 billion in the year’s first quarter compared to Rs27 billion for the same quarter last year.
Engro Fertilisers announced its first interim cash dividend for the half year ended June 2020 at Rs4 per share. The company’s profit matched market expectations.
“The earnings announcement came in line with ours and industry expectations,” said a Topline report.
The increase in the company’s revenue can be attributed to the increase in urea sales by 52% year on year basis. The increase in the sale of urea was witnessed industry wide. However, DAP sales of the company declined by 24% in 2020’s first quarter compared to the same quarter last year.
Farmers delayed purchases in the previous month (May) in anticipation of a subsidy on urea and DAP. However, the Pakistan government later decided to offer subsidies on DAP only. This led to an increase in the sales of urea.
“Regarding ambiguity on fertilizer subsidy, the company said that the government is facing some operational challenges,” said a Sherman Securities report. “However, the issue will be resolved by 4QCY2,” it read.
Selling and distribution expenses increased by 36% to Rs2.3 billion this quarter compared to the same quarter last year. This increase in expenses can be attributed to the increase in volumetric sales of urea.
Following the result announcement, EFERT’s share price appreciated by 0.2% to Rs66.6 from the previous day’s tally of Rs66.5 at the end of the market. The EFERT stock did not outperform on Thursday because the increase in share price was less as compared to an increase in the KSE-100 index by 1.1%.
EFERT is a subsidiary of the Engro Corporation. The principal activity of the company is manufacturing, purchasing, and marketing of fertilisers. Engro is also an importer and seller of Phosphate products.