Corporate results: Engro Corp’s profit up 97%, amounts to Rs13.8 billion

Fertiliser, food businesses help conglomerate in boosting earnings in 2015

KARACHI:

Engro Corp almost doubled its net earnings to Rs14 billion in the financial year ended December 31, 2015, according to an official notification sent to the Pakistan Stock Exchange on Thursday.

Pakistan’s largest private sector conglomerate reported an after-tax profit of Rs13.8 billion or Rs26.32 per share during the year under review, up 97% when compared with Rs7 billion or Rs13.59 per share of the corresponding period of 2014.

Along with the results, which analysts said were in line with market consensus, the company announced a final cash dividend of Rs7 per share, taking the total pay-out for the year to Rs18 per share.



Following the results, the stock appreciated by Rs4.51 or 1.68% compared with Rs266.91 of the previous day and traded at Rs271.42 per share at the close of market on Thursday with 3,768,800 shares traded during the day.

“The company’s net sales increased by 4.7% to Rs184 billion in 2015 compared to Rs176 billion it earned in the previous year while its gross profit margin for the period improved by more than seven percentage points to 27.9%.” Taurus Securities attributed the rise in the company’s profitability to growth in its fertiliser and foods subsidiaries.

The company’s fertiliser business witnessed a 77% increase in profits on the back of stable gas flows and commencement of concessionary gas, Taurus Securities said in its report.

The foods business, on the other hand, recorded a 256% growth in earnings mainly due to higher gross margins, which improved by 4.4% after average whole milk prices fell by 31%. “Furthermore, positive contributions from EPQL [energy business], VOPAK [chemical storage and handling business] and LNG business added to the profitability,” the report said.



On the negative side, the report said polymer arm (chemicals business) remained in the red; posting loss of Rs649 million on account of subdued PVC-ethylene core delta but the quantum of loss declined by 36% due to reversal of certain provisions. Moreover, the expected subdued performance of rice business coupled with a hefty Rs3.4 billion impairment charge has put some brakes on the bottom-line growth, it said.

During the last quarter of 2015, profits jumped to Rs4.9 billion or Rs9.4 per share, up 460% on quarterly basis mainly on the back of exceptional earnings performance in fertiliser business, which grew by 91%, the report said.

Meanwhile, the company also announced that it has appointed advisors for potential sale of up to 24% of Engro Fertilizers Limited shares to local and international investors. 

Published in The Express Tribune, February 19^th,  2016.

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