Engro Corp’s profit soars 46.5% to Rs14.3b

Engro Corporation’s profit rose 46.5% to Rs14.3 billion during the quarter ended June 30, 2021 owing to a significant rise in earnings from subsidiaries.

According to a notification sent to the Pakistan Stock Exchange (PSX) on Tuesday, the company had recorded a profit of Rs9.8 billion in the same period of last year.

Earnings per share of the company amounted to Rs15.13 in the April-June 2021 quarter as opposed to Rs9.96 in the corresponding period of previous year.

Alongside the result, the company announced an interim cash dividend of Rs7 per share, taking cumulative dividend for the first half of 2021 to Rs19 per share.

During the quarter under review, net revenue of the company rose 10% to Rs68.5 billion against Rs62.2 billion recorded in the second quarter of calendar year 2020.

“Among the subsidiaries, Engro Fertilisers’ earnings (largest contributor to Engro’s earnings) were up by 23% year-on-year to Rs4.8 billion during the second quarter of 2021,” said Topline Research analyst Sunny Kumar in a report.

“This is mainly due to improvement in gross margins by 3.3 percentage points, absence of provision (Rs600 million) on account of sales made to unregistered dealers in the second quarter of 2020 and 36% year-on-year decline in finance cost amid lower borrowing.”

He pointed out that Engro Polymer’s earnings were up 104.8 times year-on-year to Rs3.1 billion due to increase in polyvinyl chloride (PVC) sales by 33% amid a low base due to the closure of plant last year.

In addition, caustic sales rose by 100% year-on-year due to higher demand from the textile sector and core delta by 107% to $950 per ton amid supply-side disruption, the analyst stated.

According to him, the earnings per share came lower than industry’s expectations of Rs10-12.

Arif Habib Limited analyst Muhammad Jawaid Iqbal said that Engro Powergen Qadirpur Pakistan Limited (EPQL) posted a net profit of Rs506 million in 2QCY21 against Rs414 million during the same period of last year, going up by 22% year-on-year.

“Additionally, FrieslandCampina Engro Pakistan Limited posted a profit after tax of Rs1.5 billion in 2QCY21, registering a hefty surge of nine times year-on-year, on the back of growth in gross margins by 200 basis points, arriving at 21% given higher sales volumes,” he said.

Engro’s selling and distribution expenses fell from Rs2.1 billion in April-June 2020 to Rs1.8 billion in April-June 2021, a dip of 14.7%.

On the flipside, administrative expenses rose by 15.6% to Rs1.6 billion in the quarter under review. The firm had recorded administrative expenses of Rs1.4 billion in the same period of last year.

“Other income decreased by 9% year-on-year to Rs3.2 billion while other operating expenses increased by 4% year-on-year to Rs1.98 billion during 2Q2021.”

Published in The Express Tribune, August 25^th, 2021.

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