In 9MFY23, EFERT showcased a robust financial performance, reporting a significant profit of PKR 15.05 billion (EPS: PKR 11.27). This marked a remarkable 57% increase from the previous year’s profitability of PKR 9.59 billion (EPS: PKR 7.19).
During this period, the company’s top line experienced a substantial surge, reaching PKR 148.53 billion, signifyin a notable 34% YoY growth. Simultaneously, the gross profit soared to PKR 43.19 billion, reflecting a commendable 34% increase.
In 9MFY23, EFERT produced 1.72 KT urea and successfully sold 1.73 KT. This uptick in production (170KT) was attributed to improved efficiency resulting from last year’s base plant turnaround of sixty days.
Despite a significant 34% rise in the cost of sales, totaling PKR 105.343 billion in 9MFY23, up from PKR 78.57 billion in the previous year, EFERT managed to keep finance costs down to PKR 1.64 billion, showcasing the company’s improved cash position.
In the fertilizer industry, urea and phosphate experienced growth rates of 4% and 43% respectively in 9MFY23. However, EFERT’s DAP market share dropped to 16% in 9MFY23 from the previous year’s 24%. The domestic discount on urea prices stood at 54% as per management. Over the past decade, the fertilizer sector has extended significant benefits (gas price benefit) to farmers, amounting to over 4.5 times.
Management shared insights into ongoing negotiations with the government, focusing on the unification of gas prices and addressing challenges such as the smuggling of low-cost fertilizers, which have, however, been controlled in the last two months by the interim government.
EFERT’s management shared that the IHC has issued a stay order against the recovery of an additional 6% tax in FY22. Additionally, the company faces challenges related to the recovery of outstanding sales tax refunds amounting to PKR 12.1 billion, as well as subsidy receivables from government totaling PKR 6.5 billion.
Going forward, EFERT is prepared for any fluctuations in gas prices and anticipates an increase in production by operating the plant at full capacity. The company is committed to maintaining an optimal debt-to-equity ratio.
Important Disclosures
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