IGI Securities Limited – Flash Note

Karachi, August 10, 2018 (PPI-OT): Fertilizer – EFERT: Earnings up by +31%YoY to PKR 2.44/share for 2QCY18; Dividend at PKR 4.00/share

Engro Fertilizer Limited (EFERT) announced its financial results for 2QCY18 with consolidated earnings clocking at PKR 3.26bn (EPS: PKR 2.44) as compared to PKR 2.48bn (EPS: PKR 1.85) in the same period last year. In addition, the Company also announced an interim cash dividend of PKR 4.00/share.

Net sales for the quarter surged by +33%YoY to PKR 22.9bn led by price increase, taking net sales for 1HCY18 to PKR 41.1bn.

Selling and distribution expense decreased by 14%YoY to PKR 1.6bn owing to low handling costs (low urea inventory).

Other income dropped by 75%YoY to PKR 0.51bn, attributed to urea subsidy recognized for the month of Apr-18 only in our view.

In addition, finance cost decreased by 42%YoY to PKR 0.36bn owing to debt retirement.