LAHORE - Fertilizer sector’s gross profits posted an upsurge of 32 per cent annually to Rs63.48 billion in as against the gross profit of Rs48.10 billion.
According to data, total other income of the sector grew by a sharp 30 per cent annually in nine months of the current fiscal year to Rs5.53 billion while financial charges have declined by 18 per cent to Rs12.03 billion which has enabled the sector’s profit before tax to witness a superb growth of 60 per cent to Rs40.56 billion.
Total monetary sales of the sector reached Rs145.07 billion, showing a massive growth of 24 per cent YoY in comparison of Rs116.84 billion in 9MCY12.
Sector has paid total taxes of Rs12.63 billion in 9MCY13 posting an increase of 54 per cent YoY against the paid taxes of Rs8.18 billion in 9MCY12.
Total profit after tax of the sector has recorded a handsome rise of 63 per cent YoY to Rs27.93 billion as against the PAT of Rs17.18 billion during 9MCY12 primarily due to better volumetric sales owing to increased production and consumption.
Prices of the both urea and DAP experiencing declining trends which has virtually restricted local fertilizers players from increasing their prices to offset production losses due to expensive cost of production especially on account of gas prices which are scheduled to be revised upward again.
Better offtake owing to increased production, better prices in the absence of support from international market, lower imports and increase in the subsidy for fertilizer sector of PKR30 billion are the factors that ensure that fertilizer sector across the board will keep performing except those companies which are on SNGPL network.
Fertilizer sector have summed up its 9MCY13 by registering total monetary sales of PKR145.07 billion up by 24 per cent YoY against the sales of PKR116.84 billion recorded during the same period last year. Largest growth in sales was posted by Engro Fertilizers (ENGRO) whose sales grew by a massive 78 per cent YoY to PKR24.42 billion followed by Fatima Fertilizer (FATIMA) whose sales rose by 32 per cent YoY to PKR24.33 billion.
Fauji Fertilizer Bin Qasim (FFBL) showed growth of 16 per cent YoY in its sales to PKR33.78 billion while Fauji Fertilizer Company (FFC), the leading producer of the urea in Pakistan reported lowest growth in Sales amongst others. FFC showed mere 5 per cent YoY rise in its monetary sales to PKR52.53 billion. Dawood Hercules (DAWH) was the only company among the listed players whose plant remained shut down owing to non-availability of the gas being on SNGPL network. As far as the share of the players in total sales is concerned, FFC enjoys the position of the market leader with 36 per cent followed by ENGRO with 24 per cent share, FFBL with 23 per cent and FATIMA with 17 per cent share in total revenue generated by the sector during 9MCY13.
It is to be noted that the fertilizer sector of Pakistan cumulatively witnessed 36 percent yearly increase in profitability during first half of 2013 as the collective profit after tax (PAT) of the whole sector stood at Rs 16.2 billion as against Rs 11.8 billion in the same period of 2012. Summit Capital’s analyst Muhammad Sarfraz Abbasi believed that the demand of urea will grow going forward while the country is currently producing lower urea than the demand due to gas curtailment which still persists even though the government has diverted 60 million cubic feet per day (MMCFD) from Gaddu power plant to Engro.