Engro Fertilizer Reports Decline in Q3 Profits, Eyes Recovery Amid Market Challenges

Karachi: Engro Fertilizer Limited (EFERT) has reported an 11% year-on-year decline in its profits for the third quarter of 2024, with significant impacts from lower sales volumes and increased financial charges. The company announced earnings of PkR 8.6 billion, down from PkR 9.6 billion in the same period last year, amid challenging agricultural economics and an oversupply in the urea market.

According to AKD Securities Limited, the briefing highlighted multiple factors influencing the downturn, including reduced income from wheat and maize leading to decreased nutrient sales. EFERT’s management cited an oversupply due to continuous operation of RLNG plants and urea imports, which pushed quarter-end inventories up, with EFERT’s own closing at 198,000 tons.

Despite the current setbacks, EFERT management is optimistic about the near future, expecting stabilization in urea demand. However, they anticipate continued weak demand for DAP due to liquidity issues among farmers and high inventory levels maintained by private importers.

The company has initiated a temporary discount of PkR 100 per bag for October 2024 as an off-season incentive, narrowing the price gap with competitors. The continuation of this discount is subject to demand conditions. EFERT is also nearing completion of the first phase of its Pressure Enhancement Facility, expected by the end of 2024, with the second phase projected to conclude by mid-2025.

Further discussions are ongoing with authorities to unify gas prices, although no final agreement has been reached. The management remains engaged in strategic talks to navigate these regulatory and market challenges effectively.

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