Karachi July 31 2024: Engro Fertilizer profit dropped 78.53 percent in second quarter of calendar year to PKR 1.6 billion compared to PKR 7.8 billion earned last quarter, according to company filing to the exchange.
Company interim Cash Dividend for the second quarter ended June 30, 2024 also dropped to PKR 3.00 per share i.e. 30 percent from PKR 8.00 per share distribution in first quarter.
Company cities higher imported urea procurement cost to be the main reason for decline in profits.
In January 2024, Ministry of Industries and Production (“MoIP”) requested the
fertilizer industry to procure higher cost GoP (“Government of Pakistan”) imported
urea and sell it at a lower price, similar to locally produced urea. To recover the
additional cost of imported urea, the fertilizer manufacturers increased the price of locally produced urea to the extent that additional cost is recovered in 12 months.
Although Engro Fertilizers sold its entire stock of imported urea during March
quarter, the additional cost of imported urea was amortized on a pro-rata basis in the profit and loss and unamortized portion of PKR 5,319,500,000/- was retained in the balance sheet as at March 31, 2024, to be amortized over the remaining period.
During review of half-year financial statements, the management reassessed the above treatment and in order to better reflect the transaction in accounting terms, the entire unamortized portion of PKR 5,319,500,000/- (post tax impact of PKR 3,023,485,000/-) has been charged in the profit or loss for the period ended March 31, 2024.
