LAHORE - Engro Fertilizer reported loss of Rs2.9 billion for CY12, compared to Profit After Tax of Rs4.6 billion in CY11. This implies 4QCY12 PAT of Rs43 million.
The loss on annual basis was driven mainly from 8 months of shutdown of the new plant. In 4QCY12, the new plant operated at over 80 per cent capacity using diverted gas supply from Mari, which led to significant efficiency gains and partially contributed towards Engro Fertilizer achieving breakeven bottomline in 4QCY12.
Farid Aliani, an expert said that excessive gas curtailment forced Engro’s urea production to fall by 22 per cent YoY to 977k tons in CY12. Having said, 4QCY12 saw a significant improvement as production clocked in at 270k tons, up 45 per cent QoQ. Urea sales for 4QCY12 improved by 76 per cent QoQ to 345k tons, helped by bumper industry sales in Dec12.
Financial charges in CY12 clocked in 40 per cent higher YoY to PKR10.7bn, solely responsible for pushing the company into red bottomline. Recall that Engro Fertilizer has sought debt re-profiling and hasn’t been making principal retirements on local bank loans since Jun12. Thus, financial charges would not ease off in near to medium term.
In view of this result, we anticipate Engro Corp.(ENGRO) to report PAT in the vicinity of PKR1.5bn-PKR1.7bn (EPS: PKR3.0-3.4) in it’s result announcement on Friday February 15, 2013. Our result preview will be released next week. Meanwhile, we maintain BUY on ENGRO