The Board of Directors of Engro Corporation Limited today announced the financial results for the year ended December 31, 2012. During the year, Engro faced an existential threat due to government default on its contractual obligations. Blatant discrimination of the government leading to continued gas curtailment to Engro Fertilizer resulted in a cash shortfall of Rs. 10 billion and which impacted the profitability of Engro Corporation.
The consolidated revenue of the Company stood at Rs. 125billion compared to 115billion in 2011, while net profit after tax was Rs. 1,333million as compared to a net profit after tax of Rs. 8,060million, a decrease of 83%, in the same period last year. The company announced an EPS of Rs. 2.61for the year ended December 31, 2012 as opposed to the EPS of Rs. 15.77in 2011.
The government and SNGPL’s blatant default on its contractual agreement to Engro’s $1.1b EnVenplant, resulted in gas supply of approximately 9 percent of its total allocated amount throughout 2012.
The discriminatory policies of the government against Engro have also resulted in massive losses at the government level and led to acute food shortage. Urea sales have registered a decline of 12% to reach 5.2 million tons in the calendar year 2012, which is the steepest annual decline in recent history. Farmers have suffered extra burden of Rs. 53 billion due to higher urea prices on the back of continued gas curtailment to fertilizer plants whereas the national exchequer has also suffered since 2.2 million tons urea has been imported at a forex cost of $1.1 Billion and a subsidy of Rs. 57 billion (Jan 2011 -June 2012).
The agricultural sector, therefore, represents an alarming situation with the country now moving towards a significant food crisis. According to a recent study total cost of fertilizer input per acreage has witnessed a massive increase of 83% between 2008 and 2012, and has gone up from Rs. 4,450 per acre to Rs. 8,125 per acre for the average farmer.
