KARACHI: Engro Corporation posted on Wednesday a consolidated profit of Rs4.4 billion for Jan-Mar, up 3.9% on a year-on-year basis.
Its earnings announcement also carried a cash dividend of Rs5 per share.
The holding company that owns majority stakes in Engro Foods and Engro Fertilizers generated revenues of Rs34.3 billion in the first three months of 2016, down 17% from Jan-Mar 2015.
“We believe this was due to lower fertiliser off-take and a decline in urea prices in the case of Engro Fertilizers,” Topline Securities said in a note.
It noted that sales of Engro Foods remained under pressure in the Jan-Mar quarter, as the volumetric sale of its ultra-high temperature (UHT) segment declined.
Gross profit of Engro Corp fell 7.9% year-on-year to Rs10.4 billion for the three-month period under review. However, gross margins expanded 2.9% to 30.45% for Jan-Mar.
“Weak commodity prices reduced costs, which also bode well for Engro Foods. Also, the delivery of subsidised gas to EnVen fertiliser plant supported the margin expansion for Engro Fertilizers, which came online in March 2015,” said Topline Securities.
Other income recorded a year-on-year decrease of 58.8% to Rs468 million for Jan-Mar - a change that analysts attribute to a decline in the cash and short-term investment of the holding company’s fertiliser business because of the repayment of gas infrastructure development cess (GIDC) backlog.
Thanks to the prevailing low interest rates, the finance cost of Engro Corporation declined 40.7% year on year to Rs1.4 billion.
Published in The Express Tribune, April 28th, 2016.
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