Engro Fertilizer profit more than doubles

RMEngro Fertilizer Limited (EFERT) has announced profit after tax for first half of CY15 that is higher by 103%YoY as compared to the corresponding period of last year. FERT has posted net profit of Rs6.85 billion (EPS: Rs5.15 adjusted for new number of shares) on consolidated basis for 1HCY15 as compared to net profit of Rs3.37 billion (EPS: Rs2.54 adjusted for new number of shares) for 1HCY14. Along with the result, the company also announced an interim dividend of Rs1.5/share.

On a sequential basis, net profit of Rs3.79 billion (EPS: Rs2.85) for 2QCY15 is up 24%QoQ as compared to net profit of Rs3.05 billion (EPS: Rs2.30) for 1QCY15. This increase can be attributed to: 1) the Company booking expense (asset charge off) against Guddu compressors which had a negative impact of Rs577 million on the bottom-line and 2) tax related charges (revaluation of tax assets in the light of reduced tax rates) which had a net positive impact of Rs601 million on the bottom-line.

EFERT held an analyst briefing to share the details with analysts. The highlights of the results were:

  1. Post implementation of the GIDC Act 2015, the Company has challenged the imposition of GIDC on retrospective basis and concessionary gas contracts and has started paying GIDC on current billing excluding concessionary gas.
  2. The Company is considering the possibility of running the base plant on imported LNG where it believes a positive contribution margin may be achieved if LNG costs lower than US$10/mmbtu.
  3. The tax relief of Rupees of one billion from EFERT’s recently acquired EXIMP has not been utilized and is still available to the Company for the coming years.
  4. Having out-performed the market by 26%CYTD, EFERT remains one of the top picks of analysts.

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