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Engro Fertilizers Profit Decline by 24% in 2022 Despite Q4

In the fiscal year that concluded on December 31, 2022, Engro Fertilizers Limited (PSX: EFERT) declared a profit after tax (PAT) of Rs. 16 billion (CY22).

The company’s earnings decreased by 24 percent year over year (YoY) from Rs. 21 billion reported in the same quarter previous year, according to financial statistics (SPLY).

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Net sales for CY22 was Rs. 157 billion, an increase of 19% YoY from the Rs. 132 billion reported for CY21.

PAT reached Rs. 6.39 billion in 4QCY22, an increase of 4% year-over-year (YoY) from Rs. 6.17 billion in 4QCY21. The EFERT’s gross margin in 4QCY22 was 23%, while its marketing and distribution costs increased by 52% year over year.

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Ismail Iqbal Securities claims that the tax reversal of Rs. 888 million in 4QCY22 has been the main factor driving earnings increase. This is probably because the super tax issue was decided by the Sindh High Court, which ruled that the levy would not be levied retroactively. Recall that, based on CY21/FY22 earnings, a Super tax of 10% was imposed on 15 sectors for the tax year 2022.

The company’s financing costs increased 63 percent YoY to RS 2.62 billion in CY22, most likely as a result of greater operating expenses and problems with fertilizer production brought on by long wait times for letters of credit (LCs) to clear imports of raw materials.

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In CY22, EFERT reported effective taxation of 40%. Recall that the Super Tax caused the company’s effective tax rate to increase to 101 percent in 2QCY22.

In 4QCY22, EFERT reported earnings of Rs. 4.79 per share, an increase of 4% over the SPLY. The results were higher than analysts’ expectations of Rs. 3.07 per share, with the primary causes of the difference being greater than anticipated other income and a tax refund of Rs. 888 million.

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In contrast to the industry’s projection of Rs. 2.5 per share, the business declared a cash dividend of Rs. 5.00 per share for the quarter, bringing the annual payout to Rs. 13.5 per share in CY22.

The stock of EFERT at the stock exchange ended Thursday’s trading session at Rs. 85.59, up 3.17 percent or Rs. 2.63 on a turnover of 4.47 million shares.

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