February 10, 2012

Pakistan's Engro Fertilizers posts 23% rise in net profit

Pakistan's Engro Fertilizers posted a net profit of PKR4.59 billion (US$50.7 million) in 2011, up 23% from 2010 despite multiple shutdowns of its new plant last year.

Higher earnings primarily stem from urea margins surging 6% to 53% and higher sales revenue, said Topline Securities analyst Farhan Mahmood.

Meanwhile, sales revenue jumped 66% to PKR31.35 billion (US$346 million) in 2011 on the back higher urea prices and 33% increase in volumetric sales, added Mahmood.

Engro's new urea plant EnVen after starting operations in July operated at only 40% of effective capacity amid severe gas curtailment, however, the old plant was immune to the curtailment.

Resultantly, the industry decided to increase urea prices in the local market by over 100% to allow the business to meet its significant debt obligations, according to a BMA Capital research note.

However, financial charges increasing four-folds to PKR8.2 billion (US$90.5 million) from PKR1.9 billion (US$21 million) retarded profitability growth.

Alone in the fourth quarter, the company posted earnings per share of PKR1 (US$0.011), 19% lower than the earnings of PKR1.23 (US$0.013) in the preceding third quarter. The major reason behind decline in earnings is 21% fall in volumetric sales.

Hence the announcement of Engro Fertilizer earnings 2011 earnings shows that Engro Corporation profits will jump 23% on a yearly basis to PKR21.2 (US$0.23) per share.