Engro fertilizers posts 40 percent decline in profit fir CY16

Engro Fertilizers Limited (EFERT) has posted profit after tax of Rs9.02 billion (EPS: Rs6.78) for CY16 as against net profit of Rs15.03 billion (EPS: Rs11.30) for CY15, a massive decline of 40%YoY. The results were anticipated but decline is more than expected. Despite the decline in profit the Board of Directors has approved distribution of final dividend of Rs2.50/share, taking the full year payout to Rs7/share. The major takeaways are: 1) topline declined to Rs69.51 billion from Rs85.00 billion, a fall of 18 percent, 2) reduction in urea prices (down 9%YoY) due to depressed farm economics and low international price trends (down 28%YoY) to an average of US$213/ton during the year under review, 3) there was a 32%YoY decrease in finance cost on account of swift deleveraging and low interest rate environment, 4) other income increased to Rs8.13 billion for CY16 from Rs4.31 billion a year ago, an increase of 88 percent.