Corporate results: Engro profits surge 34%

Increased profits from Engro Fertiliser, Engro Foods along with lower losses from Engro Polymer help growth.

KARACHI:

Engro Corporation’s profits rose 34% to Rs5.4 billion during January to September 2011 as its single train fertiliser plant, which is the largest in the world, made its first impact on the company’s financial statements.

Increased profits from Engro Fertiliser and Engro Foods along with lower losses from Engro Polymer are the primary reasons for the growth, according to analysts.

The conglomerate’s consolidated results are in line with market expectations as analysts expected the figure to stand between Rs5.3 and Rs5.8 billion.

The board of directors announced an interim dividend of Rs2 per ordinary share along with the result.

Engro’s new plant EnVen, built at a cost of $1.3 billion, started commercial operations at the end of June. Although the plant remained shut for much of July, it operated at 80% gas flow for the rest of the period under review.

The fertiliser sector of the corporation contributed 62% to the total profits.

The market reacted positively to the result announcement as the stock price rose Rs5.63 to close at Rs118.23 during trade at the Karachi Stock Exchange.

Net sales surged 47% to Rs79 billion during the period under review compared with last year’s Rs53.6 billion.

Fertiliser and food segments lead the growth

With 48% increase in urea prices and 150% jump in volumetric urea sales, Engro Fertiliser net profit rose 22% to Rs3.5 billion during the period under review, according to a JS Global Capital research note.

The company managed to report decent profits amid gas curtailment issues at its new plant, adds the note.

Moreover, Engro Foods also reported healthy profits of Rs408 million compared to a meagre bottom-line of Rs35 million in the same period last year.

The food segment jumped due to its UHT milk business which increased its market share to 44% in nine months of 2011 from 39% in December 2010.

Published in The Express Tribune, November 1^st, 2011.