Engro Polymer’s profit drops 25% to Rs3.7b

Earnings per share stand at Rs4.07 in year ended December 2019

KARACHI: Engro Polymer and Chemicals Limited (EPCL) reported a 25% dip in profits for the year 2019 to Rs3.7 billion against Rs4.9 billion recorded in the previous year.

Earnings per share (EPS) of the company stood at Rs4.07 in 2019 compared to Rs6.21 in 2018. The company announced a cash dividend for the year ended December 31, at Rs0.20 per share that is 2%, which is in addition to interim cash dividend already paid at Rs0.60 per share that is 6%.

Topline Research Director Atif Zafar said that the company’s bottom-line was on a downward trajectory but its profitability outlook is better as their profit margins are on the higher side. Last year, the company had higher earnings due to some reduction tax while this year it has paid relatively higher taxes.

The net revenue of the company clocked-in at Rs37.8 billion in 2019 against Rs35.3 billion in the same period of the previous year. The company recorded a gross profit of Rs8 billion in 2019, up 5.3%, compared to RS 7.6 billion in 2018.

Essentially, in the third quarter of 2019, the company declared a decline in profits in order to meet the International Financial Reporting Standards (IFRS). The company re-evaluated its assets and liabilities under IFRS regulations.

“If we look at the core operations of the company, it has performed well,” said Zafar.

Finance cost surged massively to Rs1.8 billion in the period under review from Rs605 million in the corresponding period.

Recently, PVC price in the international market declined which could have affected the profitability of the company but the analyst said that ethylene’s - raw material for PVC - price decreased so the company’s profits were not affected. Engro Polymer’s plant expansion plan of PVC plant of 100,000 MT is going to be completed by the end of this year, according to an industry source. The new capacity will reach more than 290,000 MT.

Published in The Express Tribune, February 5^th, 2020.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.