July 28, 2022 (MLN): Engro Fertilizer Limited (EFERT) has reported a 48.5% YoY decline in net profits for 1HCY22 to Rs5.4 billion, against Rs10.5bn in the corresponding period a year earlier, mainly due to higher charge for super tax and a significant increase in other operating expenses.
This was reflected in the company's earnings per share which nosedived to Rs4.02 compared to Rs7.87 in 1HCY21.
EFERT’s before-tax profit stood at Rs14.8bn, down by just 3% YoY.
The top-line of the company registered a growth of 36% YoY to stand at Rs75bn in 1HCY22 amid higher urea retention prices, an increase in DAP trading margins and offtake. Meanwhile, the cost of sales of the company surged by 55% YoY to Rs52.6bn.
Despite higher sales, the gross margins of the company dropped from 39% to 30% as the company accrued industrial feed gas rate at the EnVen plant since the concessionary gas period ended on June 30, 2021, which resulted in the drop in company’s gross margin by 9ppts.
Among other lined items, selling & distribution expenses went down by 2% YoY while admin expenses witnessed an increase of 52.3% YoY. The company also booked Rs356.6mn on account of GIDC re-measurement loss and Rs389mn credit loss on subsidy receivable from the government.
The other operating expenses also went up notably by 65% due to exchange loss on payment of foreign currency denominated liability related to import of fertilizers.
On the taxation front, the company paid Rs9.4bn in terms of taxes, 97% YoY higher than the amount paid in 1HCY21, mainly owing to the imposition of super tax in FY22 budget.
According to key briefing takeaways covered by foundation securities, EFERT has charged 10% super tax on CY21 taxable income, 4% super tax on 1HCY22 taxable income and a change in current deferred tax position due to imposition of super tax.
|
Consolidated Financial Results for the half year ended June 30, 2022 (Rupees'000) |
|||
|---|---|---|---|
|
|
Jun-22 |
Jun-21 |
% Change |
|
Net sales |
75,136,271 |
55,359,257 |
35.72% |
|
Cost of sales |
(52,584,592) |
(33,950,880) |
54.88% |
|
Gross profit |
22,551,679 |
21,408,377 |
5.34% |
|
Selling and distribution expenses |
(3,793,436) |
(3,863,726) |
-1.82% |
|
Administrative expenses |
(1,380,007) |
(906,247) |
52.28% |
|
Other income |
1,099,186 |
970,644 |
13.24% |
|
Other operating expenses |
(1,852,471) |
(1,124,234) |
64.78% |
|
Finance cost |
(1,057,452) |
(839,546) |
25.96% |
|
Loss on remeasurement of GIDC provision |
(356,605) |
(516,276) |
|
|
Reversal of ECL on subsidy receivable from GoP |
(389,173) |
164,417 |
|
|
Profit before taxation |
14,821,721 |
15,293,409 |
-3.08% |
|
Taxation |
(9,408,715) |
(4,784,282) |
96.66% |
|
Profit for the period |
5,413,006 |
10,509,127 |
-48.49% |
|
Earnings per share – basic and diluted |
4.05 |
7.87 |
-48.54% |
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