EFERT: Lower finance cost, higher Other income lift profitability

MG News | October 13, 2021 at 05:05 PM GMT+05:00

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October 13, 2021 (MLN): Engro Fertilizers Limited (PSX: EFERT), has disclosed its financial performance today for 9MCY21, wherein the fertilizer giant reported a 30% YoY increase in after-tax profits to Rs14.9bn (EPS: Rs11.17/sh) compared to Rs11.49bn (Rs8.61/sh) in the corresponding period last year.

Results were accompanied with an interim cash dividend of Rs11.5/share.

The jump in the company’s earnings was emanated from 12%YoY higher offtake in Urea, 54%YoY contraction in finance cost in light of the low-interest rate environment and 42% YoY increase in Other income on account of higher dividend income from EAPL in the 1QCY21, higher interest income from government securities, term deposit certificates and bank deposits.

The top-line of the company registered a growth of 18.69% YoY, mainly on the back of record high rise in Urea Prices currently stands at Rs1,812/bag as a result of which gross profits of the company grew by 28% YoY to Rs31bn. Subsequently, the margins of the company jumped to 33% from 31% during 9MCY20, despite the discontinuation of concessionary gas prices.

Selling and distribution expenses remained stagnant while admin expenses inched up by 10% YoY. On the taxation front, the company’s effective tax rate stood at 31% against 19% in SPLY.

In addition, the company also booked a loss on the re-measurement of GIDC provision amounting to Rs786mn.

Consolidated Financial Results for the Nine months ended Sep 30, 2021 (Rupees'000)
	Sep-21	Sep-20	% Change
Net sales	92,742,114	78,138,036	18.69%
Cost of sales	(61,718,437)	(53,900,431)	14.50%
Gross profit	31,023,677	24,237,605	28.00%
Selling and distribution expenses	(5,996,344)	(5,990,180)	0.10%
Administrative expenses	(1,359,623)	(1,234,810)	10.11%
Other income	1,428,778	1,005,870	42.04%
Other operating expenses	(1,685,296)	(1,148,896)	46.69%
Finance cost	(1,265,572)	(2,762,935)	-54.19%
Loss on remeasurement of GIDC provision	(786,114)	-
Reversal of ECL on subsidy receivable from GoP	272,710	-
Profit before taxation	21,632,216	14,106,654	53.35%
Taxation	(6,711,462)	(2,615,972)	156.56%
Profit for the period	14,920,754	11,490,682	29.85%
Earnings per share - basic and diluted	11.17	8.61	29.73%

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