Engro Chemical Pakistan's first quarter profit recorded an increase of 49 percent because of higher sales as demands from growers spurted, indicating recovery in the agricultural sector. According to a statement of the company issued at the Karachi Stock Exchange (KSE) on Wednesday, the overall industry demand for urea was strong as market grew 36 percent, supported by improved financial liquidity of farmers, favourable weather conditions and availability of irrigation water.
The company's urea sales amounted to 232,000 tons, including imported urea, up 29 percent over last year, but trailed the industry growth due to limited product availability on account of low starting inventory. Engro urea production at 233,000 tons was marginally below 238,000 tons produced in the first quarter of last year.
The Daharki urea plant operated smoothly and was shut down towards end of the quarter for planned maintenance activity, including revamping of critical equipment, to enhance reliability.
The sale of Company-manufactured NPK fertiliser was 28,000 tons, up 27 percent over first quarter of 2004, while production at 37,000 tons represented a record capacity utilisation of 148 percent. The Company transacted nominal quantity of business in other purchased fertilisers, seeds and micro-nutrients.
The net profit for first quarter was Rs 409 million against Rs 274 million for same period of 2004. Increase in earnings was attributable mainly to higher urea sales and margin and the receipt of the first-ever dividend payment from Engro Asahi since the plant start late in 1999.
The operating performance at all other joint ventures was satisfactory. The first quarter profit after tax at Engro Vopak was Rs 106 million (IQ 2004 - Rs 76 million), while Engro Asahi posted net profit of Rs 69 million (IQ 2004 - Rs 90 million). The results at Innovative and Engro Eximp met shareholder expectations.
The Board of Directors endorsed for shareholder approval the creation of a wholly owned subsidiary to pursue diversification in foods business with Rs 2 billion in Engro Foods (Private) Ltd initial entry in milk processing. On full-year basis, the urea industry is expected to have another year of healthy growth.