EFERT: Result Preview for CY14

The meeting of the board directors of Engro Fertilizer Company Limited (EFERT) is scheduled to be taken place on 9th February, 2015.
Earnings likely to increase by 45%
On back of higher volumetric sales of Urea along with likely increase in other income and lower finance cost, Engro Fertilizer is expected to earn a profit after taxation (PAT) of Rs 7.96 billion (EPS: Rs 6.13) in CY14 versus Rs 5.49 billion (EPS: Rs 4.24) in CY13. In 4QFY14 alone, we anticipate 15% QoQ growth in profitability as it would surge to Rs 2.45 billion (EPS: Rs 1.89) compared to Rs 2,137 million (EPS: Rs 1.65) in 3QCY14. This would be attributed to higher sales and hike in other income. Furthermore, we expect company would announce cash dividend of Rs 1.5/share.
Sales revenue to jump 23% in CY14
Company’s net revenue likely to hike by 23% YoY to Rs 61.49 billion in CY14 against Rs 50.12 billion in CY13 on back of higher urea sales and surge in urea prices. Average urea prices increase by 4% to Rs 1,790/bag in CY14 versus Rs 1,710/bag in CY13 due to partial passing on increase in GIDC. With the support of increased availability of gas to the company, the company managed to produce more urea. As a result, urea offtake surge by 17% to 1.82 million tons in CY14 against 1.56 million tons in CY13 due to better demand.

Gross profit expected to hike
Gross profit is expected to marginally rise by 1% amounting to Rs 22.39 billion compare to Rs 22.12 billion in CY13 due to higher volumetric sales. We expect gross margins to decline by 8ppts at 36.4% in CY14 against 44.1% in CY13 due to partial increase in urea prices due to increase in GDIC.

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EFERT- Result Preview for CY14

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