LAHORE - Fertilizer sector is facing horrible gas shortage which is resulting in production losses as the sector has produced 6. 79 percent lower urea to 2. 35m tons in 1HCY11 as against 2. 52m tons produced same period last year.
Urea off take were also seen down by 11. 80 percent to 2. 67m in 1HCY11 as against 3. 03m tons in 1HCY10. On the other hand, DAP production witnessed a modest upsurge of 1. 46 percent to 0. 30m tons as against 303. 24m tons in 1HCY11. Nevertheless, DAP off take also witnessed a negligible decline of 3. 87 percent YoY to 313. 19m tons as compare to 325. 79m tons in corresponding period last year. Average per bag prices of both urea and DAP considerably increased by 46 percent and 44 percent as average per bag price of both urea and DAP were hovering around Rs1,113 and Rs3,303 respectively. Exorbitant urea and DAP prices were the key the reason behind the substantial jump in total monetary sales of the sector which posted an upsurge of 23 percent YoY to PKR42. 08 billion.
Experts said that the financial cost of the sector grew by 41 percent to Rs5. 26 billion as against Neutral. Highest increase was observed in financial cost of the ENGRO which has increased by 80 percent to Rs4. 48 billion (44 percent of the sector). Conversely, Administrative expenses of the sector posted a sharp decline of 10 percent YoY. As a result, PAT of the fertilizer sector witnessed a handsome growth 44 percent YoY over same period last year.
FFBL has shown a robust financial performance during 1HCY11 as its bottom line showed a handsome growth of 104 percent to Rs3. 52 billion versus PAT of Rs1. 73 billion in 1HCY10 due to increased Urea and DAP prices and other income by 50 percent YoY. Gross profit of the company posted a substantial rise of 81 percent YoY to PKR6. 93 billion. The company has also announced a cash dividend of PKR2. 25/share in 2QCY11.
FFC also came out with impressive financial results in 1HCY11 as its revenue grew by 21 percent YoY to PKR24. 22 billion as against PKR19. 94 billion in 1HCY10. Gross profit of the company grew by 55 percent YoY to PKR13. 69 billion as against PKR8. 83 billion in same period last year. Thus, PAT posted a growth of 61 percent over same period the last year.
Meanwhile, fertilizer numbers for the month of July 2011 has been released by NFDC showing a 4 percent decline in off take to 4. 3 million tons during 7M2011 (Jan-July 2011). With urea and DAP contributing 83 percent of total sales, their sales declined by 11 percent and 19 percent to 3. 2 million tons and 0. 44 million tons, respectively. Urea sales continued to show declining trend due to non availability amid 1) lower production (down 7 percent in 7M2011) and 2) delay in imports (down 66 percent). On the other hand, higher retail price of DAP (up on average 45 percent) remained the major factor behind lower DAP sales. Other nutrients like CAN and NP (both contribute around 13 percent in sales) increased substantially (up 50 percent) during the period primarily due to additional production from new plants.
Farhan Mahmood, an expert, said that only in the month of July 2011, total fertilizer offtake stood at 759k tons, up 13 percent (urea sales down 9 percent, DAP up impressive171 percent). On MoM, total off take remained higher by 15 percent. Though urea sales declined slightly by 2 percent, DAP sales stood impressive at 132k tons (up 93 percent). Higher DAP sales could be linked to continuity of lower availability of urea.
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