Engro profit surges 73 per cent to Rs6.4b

Fertilizer and energy subsidiaries expected to be the backbone of the surge.

KARACHI: Engro Corporation announced a net profit of Rs6.44 billion for 2010 compared with the preceding year’s Rs3.72 billion, an increase of 73 per cent.

Fertiliser and energy subsidiaries were expected to have mainly contributed to the parent company’s bottom line, said BMA Capital analyst Omar Rafiq.

The company also announced a final cash dividend of Rs2, taking the total payout for the year to Rs6 for every Rs10 share, according to a notice sent to the Karachi Stock Exchange on Monday. The board of directors in their meeting also recommended bonus shares at the ratio of one share for every five shares.

It was also decided in the meeting that the company will increase the authorised capital to Rs4.5 billion from the current Rs3.5 billion after approval from the shareholders. Engro Corporation has still not released results of its subsidiaries.

Fertiliser price hike

Engro’s revenue grew 37 per cent to Rs79 billion on account of higher urea and di-ammonium phosphate (fertiliser) prices, said Rafiq.

Urea prices averaged Rs856 per bag in 2010 compared with the preceding year’s Rs780 per bag. Similarly, DAP prices rose to Rs2,700 per bag against Rs2,000 per bag in the preceding year. Although gas curtailment reduced potential production, the  fertiliser price increase more than compensated for production losses, said Rafiq.

Engro Polymer losses  sink deeper

Engro Polymer and Chemicals Limited net losses rose to Rs814 million compared with net losses of Rs232 million, according to a notice issued last week. Finance cost more than doubled to Rs1.4 billion during 2010 as EPCL started paying interest on loans it acquired to finance backward integration, said Elixir Securities analyst Umar Nauman. Backward integration involves buying suppliers of materials in order to reduce dependency and input cost.

Published in The Express Tribune, February 15^th, 2011.