Engro Fertilizers Earnings Down 63% in 1Q2025
Staff Report :
Engro Fertilizers (EFERT) announced its earnings down 63% in 1Q2025 in financial results on Tuesday.
It also registerd a consolidated quarterly profit of Rs2.9bn that was (EPS: Rs2.17) and declined by 63% YoY and 75% QoQ.
Along with the results, the company also declared a cash dividend of Rs2.25/share, in line with market expectations.
The 1Q2025 result came higher than our expectations due to higher-than-expected gross margins.
Gross margins clocked in at 35% in 1Q2025 vs 23.3% during 1Q2024 and 35% in 4Q2024. The YoY improvement in gross margins is due to the absence of costly imported urea and no change in gas prices during the quarter.engro fertilizers new rate
Net sales of the company decreased by 59%/64% YoY/QoQ due to a significant decline in urea and DAP offtake by 58%/71% YoY and 63%/78% QoQ, respectively. To note, there was no plant turnaround during 1Q2025, and the company also continued a discount of Rs100/bag on Urea to compete in the market.
Selling and distribution expenses decreased by 27% YoY to Rs3.2bn in 1Q2025 mainly due to lower offtake during the period.
Other Income decreased by 76% YoY to Rs313mn in 1Q2025 due to a decline in cash and cash balances along with a fall in interest rates. The company has reported that its finance cost stood at Rs1.1bn, that was up 6.7x YoY and down 26% QoQ. A significant increase on a YoY basis is attributed to an increase in short-term borrowings.
Tax expense clocked in at Rs2.0bn (effective tax rate of 41.2%) in 1Q2025 vs. Rs4.3bn (effective tax rate of 36%) in 1Q2024.
The stock is currently trading at a 2025E P/E of 7.5x and dividend yield of 13.2%
