Engro Fertilizers Limited reported earnings per share (EPS) of PKR 21.16 for CY24, compared to PKR 19.61 in CY23, reflecting a year-onyear improvement. However, in 1QCY25, the company posted an EPS of PKR 2.17, significantly lower than PKR 5.81 in the same period last year (SPLY).
Management attributed the earnings decline primarily to a substantial inventory buildup, driven by the altered buying patterns of farmers.
Additionally, the company’s reduced market share was linked to the high cost of its urea product relative to competitors. Addressing concerns about operational activity, the management clarified that there are no plans for an industrial shutdown.
They explained that the inventory pile-up is largely a result of timing differences rather than structural issues. While they had anticipated a slowdown in the current quarter, the actual decline exceeded their expectations. The management expects total industry urea offtake to be in the range of 6.1 to 6.2 million tons.
Regarding the potential for exports, the management noted that urea exports have occurred in the past, but any future exports would require regulatory approval. In response to market dynamics, the company offered targeted discounts during the quarter based on demand-supply conditions.
These discounting measures are expected to continue in the current quarter as well. On the topic of crop switching, management observed that most farmers tend to sow the same crop. They added that it will take some time for the market to adjust to the sharp decline in wheat prices.
Important Disclosures
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