Engro Chemical Pakistan Limited (ECPL) has announced un-audited accounts for the nine months ended on September 30, 2009. The net profit for this period was Rs 2,599 million as compared to a net profit of Rs 3,359 million for the same period of last year.
According to a press release issued here on Wednesday, the decrease in earnings was mainly attributable to lower margins on Zarkhez, lower dividend income, partially offset by higher phosphate sales. Engro joint venture and subsidiaries are expected to continue to meet shareholders' expectations.
The market demand for urea, during the nine months ended September 30, 2009, was 4.7 million tons--an increase of 18 percent over the same period of last year (4.0 million tons). The increase was attributed to two major reasons--better farm economics for wheat, which led to increased sowing; and sowing of Bt cotton, which requires greater application of urea over conventional cotton varieties.
Domestic production, at 3.74 million tons, was almost the same as compared to 3.73 million tons during the same period of last year. International urea prices declined during the period. Current landed price of imported urea is approximately Rs 1,323 per bag ($290/ton) as against the domestic price of Rs 730 per bag. By keeping domestic prices substantially lower than international prices, the fertiliser industry provided benefit of approximately Rs 31 billion to farmers.
Industry-wide sale of phosphatic fertilisers increased to 1.13 million tons as compared to 0.30 million tons for the same period of last year. Industry demand remained high, primarily due to the decrease in phosphate prices. Urea sales were 673,000 tons, down by 15 percent for the same period of last year due to higher inventories carried forward during first quarter of 2008 and lower production during the current period.
ECPL plant produced 689,000 tons during the nine months ended September 30, 2009 against 740,000 tons during the same period of last year as a result of a planned turnaround during the second quarter of 2009. This, combined with Government's decision to distribute imported urea through National Fertiliser Marketing Limited, resulted in decline of ECPL market share to 14 percent against 20 percent of last year.
The urea expansion project at Daharki site, at 30th month of execution is progressing satisfactorily. The sale of Company manufactured blended fertilisers (Zarkhez and Engro NP) was 72,500 tons against 71,000 tons during same period of last year. Reduction in sugarcane acreage and reduced availability of financing with sugarcane growers along with higher potash prices caused a decrease in Zarkhez sales which reduced to 37,800 tons as compared to 54,000 tons during the same period of last year.
The Company, however, sold 34,700 tons of its Engro NP fertiliser against 17,000 tons in the comparative period. The Company's sale of imported phosphatic fertilisers, DAP and Zorawar, was 240,000 tons vs 54,000 tons for the same period last year as a result of higher market demand due to reduction in international market prices.
Engro Chemicals Pakistan expects robust urea demand in the backdrop of short supply sentiment which is expected to persist in the near term. However, urea imports have started coming in for Rabi while the industry is carrying enough inventories of phosphatic fertilisers to cover Rabi demand.-PR