Last update: Tue, 17 Jan 2017 11am

BR Research: Fertilizer


Pushed in the corner earlier, Engro Corporation has emerged strong. The conglomerate has turned itself around with a commendable 1QCY13 performance, thanks mainly to its flagship fertilizer business.
Latest monthly figures released by the National Fertilizer Development Centre (NFDC) reveal a healthy five percent increase in urea off-take for Rabi season against the previous one. This is the first time in over three years, that urea off-take for a full crop season has shown positive growth.
Not being connected to the SNGPL network is a blessing for fertilizer manufactures in Pakistan. Fatima Fertilizer, the countrys leading CAN and NP producer and a major urea manufacturer reaped the benefits of comparatively better feedstock gas supply during the 1QCY13. This coupled with other favourable factors helped Fatima Fertilizer quadruple its profits year-on-year.
Don't make hefty profits. It doesn't matter even if you are selling a product whose pricing has been deregulated by the government. That seems to be the message from the verdict by Competition Commission of Pakistan (CCP) this week.
National Fertilizer Development Centre (NFDC) released the fertilizer statistics for February yesterday. The urea off-take remained satisfactory for the dying months of Kharif season. But the alarmingly low inventory levels signal hefty imports in line for the upcoming Rabi season.
Fauji Fertilizer Company (FFC) has kick started the blue chips financial results season, announcing its 2012 financial results with a seven percent year-on-year slide in profitability. With the competitors yet to announce their annual results, the market expects FFCs performance as good as it would get amongst the industry players, as the company has weathered the negativities rather nicely, not letting profits go down massively.
The Rabi season did not start on a great note in terms of fertiliser application to the soil as the farmers continue to give their lukewarm response to fertiliser buying. Most worrisome is the slowdown in urea off-take which has piled on huge inventories. Urea off-take for October 2012 clocked in at 234 thousand tons - the lowest October level in five years.