Engro Polymer’s three-month profit surges to Rs1.33b

Increase comes on back of higher sales and reduced tax

KARACHI: Engro Polymer and Chemicals Limited’s (EPCL) consolidated profit soared almost seven times to Rs1.33 billion in the quarter ended June 30, mainly due to higher sales and reduced rate of tax, according to a company notification sent to the Pakistan Stock Exchange (PSX) on Thursday.

The firm booked a profit of Rs200 million in the same quarter of the previous year.

Accordingly, earnings per share (EPS) improved to Rs2.01 in the quarter compared to Rs0.30 in the corresponding period.



The Board of Directors also recommended an interim cash dividend of Rs0.80 per share. The entitlement will be paid to the shareholders whose names will appear in the register of members on September 11, 2018.

The company’s share emerged as the volume leader on Thursday with 29.94 million shares changing hands. Its share price increased 1%, or Rs0.35, to close at Rs35.54.

“EPCL surprised investors by posting an EPS of Rs2.01 that led to highest volumetric activity in Thursday’s session,” Topline Securities said in a note to its clients.

“This surprising result was due to lower effective tax rate of 2.5% on the back of availability of rebates on recent BMR activities, we believe,” it added.



The firm paid Rs34.7 million in taxes against profit-before-tax of Rs1.37 billion in the quarter. In the same quarter last year, it paid Rs185 million in taxes against the profit of Rs385.6 million.

The company booked sales of Rs8.4 billion, which were 35% higher than Rs6.2 billion in the corresponding quarter.

EPCL raises Rs5.2b

The chemical manufacturing firm also managed to raise financing worth Rs5.2 billion against the set target of Rs5.4 billion through issuance of right shares till the last date of the shares subscription on July 23, 2018, the company reported.



It hoped to raise the remaining target amount through issuing unsubscribed rights to Mitsubishi Corporation worth Rs153.2 million and in case the corporation does not take it up then Engro Corporation Limited (EPCL’s parent firm) will take up the unsubscribed portion.

The raised financing would be utilised for expansion of its production plants of PVC, VCL and other chemicals. PVC is a chemical used in making numerous plastic products including credit cards, toys and construction materials like water and sewerage pipes, while VCL remains a raw material for PVC production.

Earlier, Engro Corporation announced to invest a total of Rs10.3 billion in the company’s expansion. The amount would be financed through a rights issuance and debt accumulation.

Published in The Express Tribune, August 3^rd, 2018.

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