The profit after tax of the fertiliser sector registered an enormous growth of 36 percent YoY to Rs 16.10 billion in 1HCY13 against the profit of Rs 11.84 billion in 1HCY12. Overall urea production witnessed an increase of 3 percent YoY to 2.21 million tons in the first half of CY13. Similarly, DAP production which was quite lower in 1HCY12 witnessed an upsurge of 31.2 percent YoY to 347,370 tons during the period under review.
On the other hand, urea offtake remained lower by 1.48 percent YoY to 2.71 million tons in 1HCY13 as against 2.75 million tons in 1HCY12. Conversely, DAP offtake witnessed an upsurge of 58 percent YoY to 423,140 tons up from 268,400 tons in 1HCY12. Muhammad Sarfraz Abbasi an analyst at Summit Capital said that though operating expenses of the sector have increased by sharp 25 percent in 1HCY13, the sector has reported a rise of 19 percent YoY to Rs 31.05 billion in its operating profit. “We believe that the urea demand will grow in the coming days while the country is currently producing lower urea than the demand due to gas curtailment which still persists even though the government has diverted 60MMCFD from Guddu power plant to the Engro,” he said.
Moreover, DAP and urea prices in international market are substantially lower as currently urea is selling at the rate of $315 per tons and DAP prices are hovering around $428 per ton, he added. Abbasi said due to persistent pressure on the urea and DAP prices in international market local fertiliser producers are not in a position to increase prices of the DAP and urea.
“The sector seems to be performing well even though the international prices of DAP and urea are down. However, we have observed that the offtake of both urea and DAP remained quite satisfactory in initial seven months of CY13,” he added. The offtake is expected to improve further in the remaining period of the CY13 and will continue to help the sector to show improvement in earnings, he hoped.
Meanwhile, fertiliser sector has reported cumulative monetary sales of Rs 90.87 billion in 1HCY13, showing a massive growth of 25 percent YoY. While, the sector has shown a massive decline in its other income by 19 percent YoY to Rs 2.63 billion as compared to the other income of Rs 3.26bn in 1HCY12.