Engro Fertilizers says its urea production in 2023 hit record high

Engro Fertilizers has announced that it set a new production record of 2.3 million tonnes of urea last year. The Pakistani company said that despite facing challenging macroeconomic conditions, an increased super tax, and surges in gas prices, it continued to play a crucial role in the agricultural sector by ensuring that farmers were able to access affordable fertilizers. Engro Fertilizers also noted that the rupee’s sharp devaluation had a significant impact on its Base Plant, which supplies gas under the dollar-pegged Petroleum Policy 2012, linked to crude oil rates.

The company’s latest annual report to the Pakistan Stock Exchange (PSX) revealed an 18.3% increase in urea production compared to 2022, which can be attributed to the enhanced operational efficiency of its EnVen and Base Plants in Sindh Province. As a result, Engro Fertilizers’ urea sales soared by 20.3% to 2.32 million tonnes, boosting its market share to 35%.

Engro Fertilizers continued to implement the policy, ensuring that local farmers could benefit from lower domestic urea prices. At the close of the year, the Maximum Retail Price (MRP) of urea was PKR 3,596 per bag ($12.91), which is 40% lower than international prices, translating to an annual contribution of approximately PKR 330 billion ($1.18bn) to the income of farmers in Pakistan. There is also an ongoing collaboration with dealers to support government efforts to prevent urea hoarding and market manipulation, aiming to enhance crop productivity and farmer profitability.

In 2023, the domestic urea manufacturing sector played a pivotal role in substituting imports, saving the country $2.3bn, with Engro Fertilizers contributing $835mn. The company also significantly increased its contribution to the national treasury, paying nearly PKR 34.7 billion ($124mn) in taxes, duties, and levies, a substantial rise from PKR 11.6 billion ($40mn) in the previous year.

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Engro Fertilizers reported a consolidated profit after tax of PKR 26.2 billion ($94mn) for 2023, with earnings per share (EPS) of PKR 19.61. This financial success was primarily driven by increased production from long-term reliability projects, cost optimization strategies, efficient working capital management, and higher interest income.

To maintain these high levels of domestic urea production and ensure the food security of Pakistan, Engro Fertilizers, along with other major fertilizer manufacturers, is investing in the Gas Pressure Enhancement Facilities (PEF) project, with Engro’s expected capital expenditure surpassing $100mn.