Karachi: Engro Fertilizer Limited (EFERT) experienced a significant decline in its earnings for the second quarter of 2024, primarily due to extensive maintenance activities and production downturns at its Enven plant. The facility, responsible for 60-70% of the company's urea production, was offline for 55 days, resulting in a substantial drop in production and financial performance.
According to JS Global, the Enven plant's downtime led to a 40% quarter-over-quarter and 33% year-over-year decrease in urea production, totaling just 361k tons. This reduction significantly affected the company's market share, which fell from 33% in the same quarter last year to 25%. Consequently, EFERT's second quarter revenues plummeted by 47% quarter-over-quarter, and earnings per share dropped by 79% to RS1.25.
The period also saw EFERT revising its first-quarter earnings downward due to changes in accounting for the cost of imported urea. The company decided to fully expense the previously unamortized amount of Rs5.3 billion, resulting in a 28% decrease in first-quarter EPS to Rs5.81. Despite these challenges, the company's earnings for the first half of 2024 were up 76% year-over-year, largely due to a lower comparative base affected by higher taxation in the previous year.
Ongoing disparities in gas tariffs remain a critical issue for EFERT, putting the company at a disadvantage compared to competitors like FFC and Fatima, which benefit from direct gas supplies from MARI. The anticipated unification of gas prices could alleviate some pressure on EFERT's profitability; however, delays could continue to impact the company negatively.