July 29, 2021 (MLN): Engro Fertilizer Limited (EFERT) has posted a 2.35x increase in net profits to Rs10.5bn (EPS: Rs7.87) for the half-year ended on June 30, 2021, as against the net profits of Rs4.45bn (EPS: Rs3.34) in the corresponding period last year.
Alongside financial results, the company announced an interim dividend of Rs4/share for the period mentioned above.
The increase in the company’s profitability is mainly attributable to better Urea retention prices, increased profitability from fertilizer trading business, a decline in finance cost, and higher other income due to the strong cash position of the company given advances from customers for DAP fertilizer, a report by Foundation Securities highlighted.
Given higher urea prices, the gross margins of the company jumped from 34% to 39%. The top-line of the company surged by 36% YoY while its cost of sales inflated by 27.26% YoY.
On the cost front, the company’s Admin and selling expenses surged by 25.8% and 12.7% YoY respectively while its operating expenses dipped by 17.9% YoY.
Although the company witnessed a sharp 95% YoY increase in tax expenses, the lower effective tax of 31% against 35% in the previous year supported the bottom line.
Moreover, EFERT also booked a loss of Rs516.27mn on re-measurement of GIDC provision and gained Rs164.2mn on reversal of expected credit loss on subsidy receivable from Gov’t.
Consolidated Financial Results for the half-year ended June 30, 2021 (Rupees'000) |
|||
---|---|---|---|
|
Jun-21 |
Jun-20 |
% Change |
Net sales |
55,359,257 |
40,702,810 |
36.01% |
Cost of sales |
(33,950,880) |
(26,678,068) |
27.26% |
Gross profit |
21,408,377 |
14,024,742 |
52.65% |
Selling and distribution expenses |
(3,863,726) |
(3,427,557) |
12.73% |
Administrative expenses |
(906,247) |
(720,134) |
25.84% |
Other income |
970,644 |
504,717 |
92.31% |
Other operating expenses |
(1,124,234) |
(1,370,595) |
-17.97% |
Finance cost |
(839,546) |
(2,107,721) |
-60.17% |
Loss on remeasurement of GIDC provision |
(516,276) |
– |
|
Reversal of ECL on subsidy receivable from GoP |
164,417 |
– |
|
Profit before taxation |
15,293,409 |
6,903,452 |
121.53% |
Taxation |
(4,784,282) |
(2,446,612) |
95.55% |
Profit for the period |
10,509,127 |
4,456,840 |
135.80% |
Earnings per share – basic and diluted |
7.87 |
3.34 |
135.63% |
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