KARACHI, Oct 25: Engro Chemical Pakistan Limited announced on Thursday, the third quarter net profit at Rs419 million, showing 18 per cent growth over Rs356 million earned during same period a year ago.

The net income for nine months to end-September stood at Rs706 million, up 65 per cent over the three quarter earnings amounting to Rs429 million, in 2000. The Board also announced the second interim dividend at Rs2 per share, which made the cumulative dividend for Jan-Sept 01, to Rs 4 per share—the same as last year.

During the day’s trading at the Karachi Stock Exchange, the share in Engro slipped by Rs2.85 to close at Rs54.75, after hitting the highest at Rs59.35. Volume was recorded at 8.4 million shares.

In a statement released with the third quarter financial figures, management attributed the higher profit to “improved urea margins achieved in the fourth quarter of 2000, the reduction in long term interest and gains on the company’s foreign currency deposits.”

Revenue for the third quarter was down 12 per cent to Rs2,360 million, from Rs2,672 million in the same period of last year, with the overall three quarter revenue posting 5.7 per cent decline to Rs4,883 million, from Rs5,177 million in the same time of 2000.

The company observed that the overall market demand for urea continued below last year by 2 per cent. The company’s sale of urea stood at 535 thousand tons, representing market share of 19 per cent, which was about the same as last year. The company stated that during the third quarter there was no increase in the price of gas nor was there any change in the company’s selling price of urea. It added: “The price of urea in the domestic market was on the average 25 per cent below the cost of imported urea.”

Production of urea at the Daharki plant was up 5 per cent to 209 thousand tons during the third quarter, from 199 thousand tons in the same period of previous year, but the output for the nine months combined stood 2.7 per cent lower at 577 thousand tons, from 593 thousand tons in 2000. The company ascribed it to “plant equipment limitations”, which were being addressed.

Engro’s granulated NPK fertilizer plant at Port Qasim, which had begun trial production in the first quarter this year, was reported to have encountered startup problems which were being overcome. The NPK plant, nonetheless, contributed 11 thousand tons, which took the aggregate urea production to 593 thousand tons, at level with the output in the three quarters of 2000.

Effective September 1, 2001, the government had levied GST at 15 per cent on all other fertilizers. Urea had already been placed in the GST net effective April 1, based on deemed price. The company said that the GST burden in case of urea was absorbed by the industry, whereas in case of other fertilizers, it was being borne by the farmers. “The timing of the levy of GST is unfortunate in view of the hardship being faced by the agricultural community due to water scarcity and low crop prices,” the company said.

Looking ahead, the company stated that the anticipated shortage of irrigation water could adversely impact the company’s business. However, on balance, Pakistan’s fertilizer industry was expected to remain fairly unaffected from the recent slow down in the global economy.

The management report on Thursday did not contain a word on the seed business, in which Engro had made the first foray during the first half this year; The company had begun marketing hybrid seeds of Corn, Sunflower and Sorghum under the brand name of ‘Bemisal’.