Misr Fertilizers Production Company - Flash Note
​EGP Floatation had a direct effect on the companies’ production costs, as cost/ton witnessed 60-70% increase, with cost/ton averaging at EGP 3,000/ton. The reason behind the increase is the increase in natural gas cost in EGP terms (represents 60% of total COGS), which stands at USD 4.5/mmbtu, following the floatation. The latest EGP/USD value at 18.0 leads to 102% increase in natural gas cost for fertilizers producers leading to a sharp increase in cost/ton. Meanwhile, selling prices remained unchanged with the government forcing producers to supply the majority of their production to the Principle Bank for Development and Agriculture Credit (PBDAC). Prices have been unchanged since 2014, where prices were raised to EGP 2,000 per ton of urea and EGP 1,900 per ton of nitrate. The increase in cost means a negative gross margin for companies that only sell in the local market. Meanwhile, other companies are only allowed to export certain products at a maximum of 45% of production. It is worthy to mention that a company like Abu Qir Fertilizers export revenues accounted for 20% of the company’s total revenues in FY-16. This does not offset the effect of the increase in natural gas cost which led companies to abstaining from supplying their quota. Due to the unfavorable margins for fertilizers producers it would be impossible for them to maintain operations at current price levels. As a result, we expect price increase to take place very soon with prices expected to be raised by 50% to reach EGP 3,000/ton.
Misr Fertilizers Production Company Sae. Misr Fertilizers Production Co SAE, formerly Misr Oil Processing Co SAE, is an Egypt-based company that is engaged in the production, marketing, wholesaling and distributing of fertilizers and petrochemical products. The Company's various products include ammonia, urea and nitrogen.
Since its founding in 1992 as a privatization consulting office to the government of Egypt, Prime has successfully reinvented itself as a regional investment bank with a presence in major Arab markets. We provide innovative and outstanding financial services to corporations, institutions, governments, and individuals, using the breadth of our expertise to enable them to reach their objectives.
Over the years, we have refocused our business and our people while extending our geographical reach and strengthening our technological capabilities.
Today, Prime is:
- A competitive leader in the region
- Focused on both clients and products
- Led by pioneers who see change as an opportunity that constructively challenges the status quo
- Driven by a fearless and unconditional commitment to delivery and performance
- Supported by a culture that emphasizes teamwork and a sense of urgency
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.