An official source with Abu Qir Fertilizers Company said the company’s performance has been negatively affected by the ongoing global coronavirus (COVID-19) pandemic.
This comes on the back of many countries, particularly in Europe, putting in place precautionary measures at ports. Restrictions on exports have also been put in place, which have in turn placed obstacles on imports, delaying shipments of raw materials and in turn manufacturing schedules.
The company has also suffered from a decrease in global market demand due to the restrictions imposed to contain the virus’ spread, which has in turn, negatively affected export prices.
The ongoing pandemic has also negatively affected market demand and the level of domestic prices. These repercussions led to a decrease in sales revenues in the fiscal period ending on 31 March to EGP 5.8bn, a decrease of 10.6% from the corresponding period of last year.
The source pointed out that despite the company achieving a boom in production, the profits fell due to the repercussions from the virus and the low-interest rates at banks.
This has lowered the company’s investment value, in addition to the costs the company incurred to fight the pandemic.
Naeem Research said that it has a neutral view on the Abu Qir Fertilizers short-term outlook, as urea and nitrate fertiliser prices remain flat on the back of the coronavirus.
However, Naeem Research anticipates that the proportion of exports could increase beyond 55%-60%, given the start of Kima 2.
This comes as the government would be securing its share of the local supply quota from the new producer starting April 2020. Naeem Research added its recommend to BUY on Abu Qir Fertilizers with a TP of EGP 23.37 / share.