Engro Polymer and Chemicals Limited (EPCL) managed to boost its net profit by over six times and revenues by 27% year-on-year in the first six months of the calendar year 2013, according to the company’s financial results published on Monday.
The quarterly earnings, however, remained below market expectations, said an analyst report.
A subsidiary of Engro Corporation – Pakistan’s largest private sector conglomerate – EPCL reported a net profit of Rs425 million or Rs0.64 per share for the first half of 2013 that ended on June 30. This translates to an increase of 619% from Rs59 million it had earned in profits during the same period of last year. The revenues for the period under review increased to Rs12 billion, up 26.9% from Rs9.4 billion it grossed in the same period in 2012.
However, the country’s only fully integrated vinyl chloride chemical complex and manufacturer of important industrial chemicals (raw materials) saw its stock price fall 7% to Rs12.71 at the close of business on Monday – after trading at over Rs13 for nearly a month.
“The quarterly results were lower than our estimates,” Global Research said in its report. It is mainly on the back of higher costs, the report said – EPCL registered earnings of Rs162 million or Rs0.24 per share for the quarter ending June 30, a decrease of 38% quarter-on-quarter (QoQ).
The report also said the increase in revenues was primarily supported by volumetric dispatches as international prices of polyvinyl chloride (PVC) – third-most widely produced plastic after polyethylene and polypropylene – declined 7% QoQ to $1,020 per ton during the second quarter of 2013.
Higher revenues were also sustained by exports of vinyl chloride monomer (VCM) – an important industrial chemical – the report said, as the company’s VCM plant has started to run efficiently with the company estimating its annual production at 165,000 tons for 2013.
The company’s finance cost increased 5% QoQ to Rs327 million in spite of declining interest rates and a lower degree of currency depreciation, the report said. This increase was mainly caused by a higher value of accounts payable for the company caused by an anticipated increase in production, it said.
Published in The Express Tribune, August 6th, 2013.
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