KARACHI, Jan 29: The two fertilizer giants, Fauji Fertilizer and Engro Chemical — which together control over 70 per cent of the market share — announced on Wednesday, the financial results and dividend for the year ended December 31, 2002, which came close to analysts’ expectations.

Engro Chemical Pakistan Limited posted after tax profit amounting to Rs1.13 billion and cash dividend at 35 per cent. Some of the analysts forecasts: IP Securities: between Rs990 million to Rs1.1 billion; InvestCap: Rs1.25 to Rs1.30 billion and KASB: Rs1.1 billion. Most analysts following the fertilizer sector would have reason to be pleased with themselves for Engro not only declared the expected cash dividend of 35 per cent, but also the stock bonus at 10 per cent, which analysts had thought was a strong possibility, since the company had not declared a bonus last year, because of tax that was imposed on bonus issues. Aggregate cash dividend declared by the company stood at 75 per cent.

The Board meeting of Fauji Fertilizer Company Limited was held in Milan, Italy, that is why the results were received after the close of trading at the stock exchanges on Wednesday. The company showed after tax profit amounting to Rs3.1 billion for the year 2002 and proposed final dividend at 10 per cent, which together with the earlier interims made a total cash payout at 90 per cent. Analysts expectations of final dividend and earnings were almost in line with the actuals.

The shares in both urea units came under pressure at the stock market, possibly more due to the overall slump in the market. Engro scrip declined by Rs1.70 to close at Rs91.30, from the overnight level of Rs93 with trading seen in 15.1 million shares. Share in Fauji slumped by Rs3.35 to close at Rs77.40, from the opening value of Rs80.75 with 4 million shares changing hands.

A statement to support the figures was not immediately issued by Fauji Fertilizer, but Engro Chemical stated in a press release that the company’s revenue had grown 33 per cent due to the record sales of urea, DAP and NPK fertilizers. Revenue rose to Rs10.9 billion for the latest year, from Rs8.2 billion the previous year. The growth in revenue was said to be due to the record sales of urea, DAP and NPK fertilizers. “The company retained its urea market share of 20 per cent and grew DAP market to 27 per cent from 13 per cent last year”, stated Engro, adding that production of Engro urea at 852,000 tons during the year under review was a new record from the previous best of 808,000 tons achieved in 2000.

The company stated that increase in after tax profit had been limited to 6 per cent, in spite of record production and sales, higher dividend from Engro Vopak Terminal Limited, lower financial charges and reduction in losses in NPK and Seeds businesses. The favourable events were said to have been ubstantially offset by the full year impact on expiry of the 1993 tax holiday on the expansion earnings and provision of additional taxation on imported products.

Sales at Fauji Fertilizer was seen to have increased to Rs16.8 billion, from Rs12.0 billion the previous year. Net profit after tax decreased to Rs3.1 billion, from Rs3.2 billion the previous year. The board paid Rs2.3 billion in cash dividends. Analysts were expecting earnings to be higher, because of quantity driven top line growth due to the half year impact of Pak Saudi Fertilizer Limited’s merger resulting in a 40 per cent growth in urea capacity and increase in overall urea sales during the year, due to improvement in water conditions. The downside in bottomline appeared to be due to increase in costs and decline in “other income”, to Rs784 million, from Rs1.1 billion in 2001. Analysts had cautioned: “Merger related expenses and greater than expected pressure on other income may have a negative impact on profits”.