Earnings: Engro Polymer announces whopping profit

Earnings per share jumps to Rs1.07 for CY13.

KARACHI: Engro Polymer and Chemicals – a subsidiary of Engro Corporation – has announced a profit after tax of Rs707 million on Monday for calendar year 2013 (CY13), up by a whopping 818% compared to just Rs77 million in the previous year.

Earnings per share (EPS) jumped to Rs1.07 during CY13 against an EPS of Rs0.12.

On a quarterly basis, the company posted earnings of Rs154 million or an EPS of Rs0.23 during fourth quarter of CY13 (4Q CY13) compared with a loss of Rs6 million posted during 4Q CY12.

The potential increase in earnings was marred by a higher effective tax rate of 72% during 4Q CY13, Global Research reported on Monday.

The company’s revenues increased by 20% year-on-year (YoY) to Rs24.78 billion during CY13 because of around 10% rupee depreciation during the period. Moreover, the company also underwent a Polyvinyl Chloride (PVC) de-bottlenecking process, which allowed its annual capacity to increase by 6,000 tons.

As a result, higher PVC off-take also contributed to the increase in the company’s top-line. On a quarterly basis, company’s revenues increased by 9% quarter-on-quarter (QoQ) to Rs6.64 billion during 4Q CY13 because of around 4% rupee depreciation during the period and an increase in local caustic soda prices.

The company’s gross margins increased by 4.9 percentage points (pps) to 22.2% during 4Q CY13 because of a 12% YoY increase in PVC-Ethylene margins to dollar 350 metric tons during the period.

On a quarterly basis, gross margins remained stable despite a decrease in its primary margins by 15% QoQ. The primary reason for stable margins was rupee depreciation and a likely increase in PVC off-take.

Engro Polymer’s financial costs declined by 52% QoQ to Rs237 million during 4Q CY13 because of an absence of exchange losses during the period. During 3Q CY13, company experienced an exchange loss of Rs200 million because of a 6% rupee depreciation during the period.

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Published in The Express Tribune, February 4^th, 2014.

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