Karachi, April 20, 2022 (PPI-OT): EFERT: Corporate briefing session key takeaways

Engro Fertilizers Limited (EFERT) announced its 1QCY22 result on 19th Apr, 2022 wherein the company posted earnings of Rs5.5bn translating into an EPS of Rs4.13. Company also announced a dividend of Rs5.5/share with the result.

Sales were lower during the quarter despite fertilizer available for sale due to the Government’s direction to ensure sufficient buffer for Kharif season.

Company shared that it enjoyed lucrative returns on its trading portfolio during 1QCY22 as a result of higher global fertilizer prices.

The company shared that its Base plant is expected to shut down for around 50-60 days during CY22.

The management recognized that lack of clarity on the issue of the expiry of concessionary gas persists and the company has been in discussions with the GoP and SNGP, hoping for a positive decision.

The industry still faces the issue of pending Sales tax refunds to the tune of Rs58bn due to input-output tax differential, EFERT’s share in it is Rs11bn. Subsidy receivables are another challenge for the industry and the total receivables due from government are ~Rs20bn, EFERT’s subsidy receivable stands at Rs6.5bn.

Management supports the shift to weighted average cost of gas (WACOG) to address the rising gas circular debt issue. Any increase in gas prices is likely to be passed on by the industry. Company recommends direct subsidy for farmers to shield them from higher prices in such a scenario.