Engro Fertilizers Books a 111% Increase in Profits in Q3 2020

Engro Fertilizers Limited has announced its financial results for the 3rd quarter that ended on September 30, 2020.

According to the notification to the PSX, the company booked a profit of Rs. 7.03 billion, increasing by a massive 111.75% or 1.11x as compared with Rs. 3.32 billion profit earned in Q3 2019. This took the nine-month profit to Rs. 11.49 billion, up by 9.35% as compared to Rs. 10.51 billion earned last year.

The earnings came higher-than-industry expectations due to a lower-than-expected effective tax rate, said a report by Topline Securities.

Along with the result, the company announced an interim cash dividend of Rs. 5.0/share, taking cumulative dividend in 9M2020 to Rs. 9.0/share.

During the quarter, the net sales of the company increased by 38.12% to Rs. 37.43 billion as compared to Rs. 27.10 billion due to an increase in Urea and DAP offtake by 35% year on year to 616,000 and 90% year on year to 183,000 tons, respectively.

The gross margins of the company declined by 3.6ppts year on year to 29% in Q3 2020. The selling and distribution expenses were increased by 24.27% to Rs. 2.56 billion as compared to Rs. 2.06 billion due to an increase in volumetric sales of Urea and DAP.

The other income of the company saw a substantial decline of 59% to Rs. 501 million in Q3 2020 as compared with Rs. 1.21 billion due to lower short-term investments and lower interest rates.

The effective tax rate clocked in at 2% in Q32020 vs. 44% in Q32019 due to tax reversal as per Topline Securities.

The earnings per share of the company increased to Rs. 5.27 from Rs. 2.49 in the third quarter.

At the time of filing this report, EFERT’s shares at the exchange were trading at Rs. 66.89, up by Rs. 3.34 or 5.26%, with a turnover of 17.01 million shares on Wednesday.

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