Engro Fertilizer Profit Falls 32% in Q3 Amid Lower DAP Sales
Engro Fertilizer Limited (EFERT) reported a 32% year-on-year decline in third-quarter earnings, as weaker DAP sales and higher operating expenses weighed on results.
Engro Fertilizer Limited (EFERT) has announced its 3QCY25 result wherein the company posted consolidated net earnings of Rs5.8bn (EPS Rs4.4) as compared to net earnings of Rs8.5bn (EPS Rs6.4) during same period last year, down by 32%YoY.
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The result is lower than our estimate mainly due to higher than expected operating expenses. ▪ Along with the result, company also announced interim cash dividend of Rs4.5/share, taking cumulative dividend to Rs11/share in 9MCY25.
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During 3QCY25, net revenue clocked in at Rs54.8bn (down 7%YoY). The decline is mainly led by lower DAP sales (down 81%YoY). ▪ Gross margin clocked in at 33% versus 35% during the same period last year (down by 2ppt).
The decline can be mainly attributed to lower urea prices. Despite ease in inflation, operating cost stood at Rs7.5bn (up 25%YoY) Moreover, finance cost remained flat on yearly basis despite higher borrowing, while we await for detail accounts for further clarity.
On sequential basis, earnings increased by 6%QoQ on the back of rise in Urea sales (up 37%QoQ). ▪ Cumulatively during 9MCY25, net earnings declined by 21%YoY mainly due to lower Urea sales (down 3%YoY), DAP sales (down 52%YoY) and elevated finance cost (up 55%YoY).
As per recent accounts, company’s net debt stood at Rs72.7bn versus Rs34bn during the same period last year. The increase is mainly due to higher inventory as company’s Urea inventory stands at 0.59mn tons,” Sherman Research said.
