Engro Fertilizers’ Profit Up 73% in First Half of 2024

Engro Fertilizers Limited (PSX: EFERT) announced its financial results for 1HCY24 posting a consolidated profit after Tax (PAT) of Rs. 9.4 billion against Rs. 5.46 billion in 1HCY23, up by 73 percent year-on-year (YoY). Consolidated earnings in 2QCY24 clocked in at Rs. 1.66 billion, up by 57 percent YoY. Along with the result, the EFERT announced a cash dividend of Rs. 3.00 per share (Rs. 11.00 per share in 1HCY24). Vice President JS Global Waqas Ghani said in a brief review that EFERT changed its accounting for the additional cost of imported urea sold in Q1. “Initially, it had decided to amortize the cost over 12 months, but it has now fully expensed the remaining unamortized amount of Rs. 5.3 billion (Rs. 2.3/share post-tax) in its P&L for the period ended 1QCY24 for better accuracy. Please note that FFC also expensed the whole amount in 1QCY24. The below-expected results for 2QCY24 are also due to higher finance costs in addition to lower margins,” he said. He said half-year results were below expectations as repair charges spiked the cost of sales in 2Q, resulting in lower gross margins. Net sales in 1HCY24 clocked in at Rs. 113.2 billion, up by 37 percent YoY. On a quarterly basis, the topline during 2QCY24 witnessed an uptick of 3 percent YoY, settling at Rs. 39.4 billion. Gross margins in 1HCY24 arrived at 21.49 percent compared to 95 percent in 1HCY23. Whereas, gross margins in 2QCY24 arrived at 18.10 percent. Other income swelled up by 75 percent YoY settling at Rs. 2 billion in 1HCY24 given higher income from cash and cash balances, according to Arif Habib Limited. Meanwhile, in 2QCY24, the other income came out to be Rs. 745 million, up by 67 percent YoY. Finance cost climbed up by 22 percent YoY, clocking in at Rs. 1.386 billion during 1HCY24 owed to higher interest rates. Whereas, the finance cost in 2QCY24 swelled up by 74 percent YoY. reaching Rs. 1.225 billion. The company booked effective taxation at 35 percent in 2QCY24 vis-à-vis 85 percent in 2QCY23. To recall, during 2QCY23 an additional 6 percent super tax was levied on the profit before tax of CY22 and 1HCY23, respectively. EFERT posted earnings per share (EPS) of Rs. 1.25 for 2QCY24 and an EPS of Rs. 7.06 for 1HCY24. At the time of filing, the company’s scrip at the bourse was Rs. 169.25, up 0.95 percent or Rs. 1.59 with 12.2 million shares on Wednesday.