AgriTech Ltd Reports Positive Sales Growth Amid Financial Challenges.

Lahore: AgriTech Ltd conducted an analyst briefing today to discuss its financial performance for the first nine months of the calendar year 2024 (9MCY24) and outline its future prospects. The company reported a notable increase in sales, reaching PkR19.0 billion, a 36.7% year-on-year growth compared to PkR13.9 billion in the same period last year. This growth was primarily driven by higher urea prices.

According to AKD Securities Limited, AgriTech Ltd’s operating margins improved to 16% in 9MCY24 from 11% in the previous year. The company also reported a 24.4% year-on-year decline in net losses, amounting to PkR2.1 billion, despite facing higher financial charges, which increased by 18.6% over the same period. The potential acquisition of AgriTech by either FFC or MLCF is expected to be finalized by December 2024 or January 2025.

The company is currently implementing a court-approved scheme to restructure its overdue long-term debts and related mark-ups. This includes issuing preference shares and privately placed term finance certificates (PPTFCs) or Sukuks. As part of this restructuring, AgriTech disbursed PkR500 million to short-term lenders on a pro-rata basis and initiated bilateral settlements to reduce its overall debt burden.

During 9MCY24, AgriTech’s urea sales stood at 194,000 tons, marking a slight increase of 0.5% year-on-year, despite a significant 40% year-on-year rise in urea production. However, phosphate sales saw a decline of 13.9% year-on-year, amounting to 37,000 tons, despite a 37.2% increase in production. The overall industry witnessed a 3.7% year-on-year rise in urea production due to continuous gas supplies, while phosphate fertilizer production increased by 36.9%.

Despite these production increases, the industry experienced a decline in urea and phosphate offtakes by 7.5% and 14.0% year-on-year, respectively, primarily due to deteriorating farmer economics. Currently, AgriTech’s cost of feed gas is PkR1,597 per mmbtu, excluding taxes, with a gas allocation volume of 29 mmcfd. The company managed to maintain positive contribution margins in line with international DAP price fluctuations, which remained volatile between US$625 and US$650 per ton.

AgriTech booked tax losses amounting to PkR89.4 million during the year. The government’s priority to maintain food security while preserving foreign exchange reserves is expected to ensure a continuous supply of gas to the company.

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