Engro Corporation has officially announced its financial results for 2019.
The company posted a consolidated profit-after-tax (PAT) of Rs. 30.28 billion, up by 28.15% as compared with a profit of Rs. 23.63 billion earned last year. Overall consolidated revenue grew by 32% to Rs. 225.91 billion in comparison to Rs. 171.56 billion in 2018, which was mainly driven by energy projects in Thar coming online during July 2019 and augmented by the higher turnover of Fertilizers and Petrochemicals businesses.
Profit attributable to the owners was recorded at Rs. 16.53 billion compared to Rs. 12.70 billion for last year.
This growth in profitability is after accounting for a provision of Rs. 1.24 billion relating to impairment of the company’s investment in FrieslandCampina Engro Pakistan Limited, noted the company in a statement.
On a standalone basis, the company posted a profit of Rs. 14.30 billion against Rs. 12.72 billion for the comparative year, translating into an EPS of Rs. 24.83. This increase is primarily attributed to higher dividends from subsidiaries as well as higher interest income on investable reserves.
The company announced a final cash dividend of Rs. 1.00 per share for the fourth quarter, bringing the cumulative payout for the year to Rs. 24.00 per share.
The company announced that the fertilizer business achieved a historic milestone of highest ever Urea production of 2 million tons due to better plant efficiency and higher gas availability. This, coupled with higher fertilizer prices, has resulted in an increase of 11% in sales revenue over the prior year. The business recorded a profit of Rs. 16.87 billion – down by 3% from last year due to a one-off deferred tax impact of higher future corporate tax rates introduced through Finance Act, 2019.
Urea prices are expected to remain under pressure following a prospective reduction in GIDC. In response to this reduction, the business passed on the benefit to the end consumer through a price reduction of Rs. 160/bag. Furthermore, the fertilizer industry continues to face challenges in the recovery of long outstanding subsidy and retrospective settlement of GIDC.
Polymer business recorded revenue growth of 7%, while profit after tax was Rs. 3.66 billion as compared to Rs. 4.93 billion for last year. This fall in profits is attributable to inflationary impacts in the form of higher energy prices and interest rates coupled with one-off gains recorded in 2018. In line with its long-term strategy, the business successfully initiated commercial production and commenced exports from its Caustic Flake plant.
Development of the 3.8 Mt per annum mine at Thar concluded with the successful ‘Test on Completion’ on June 3rd, 2019. Thereafter, Commercial Operations Date (COD) was declared on July 10th, 2019 for both mining and power projects and the Thar power plant has been running smoothly ever since.
Further, the project commenced construction of Phase II of the mine expansion and achieved Financial Close on December 31st, 2019, which will enhance production of coal from the mine to 7.6 Mt per annum.
The Qadirpur Power Plant continued to demonstrate excellence with a Net Electrical Output of 1,097 GWh to the National Grid. Receivables from power purchaser remained high and are becoming a continuous challenge for the business and the power sector in general and need urgent attention from the relevant authorities.
Elengy Terminal handled 74 cargoes in line with last year. The LNG terminal currently fulfills more than 12% of the country’s gas requirements. The Engro Vopak Terminal witnessed a volumetric increase of 6% for chemicals and LPG handled over last year, which is mainly attributable to higher chemical imports.
During the year, Engro expanded its focus on investing in human capital and people development, paving way for evolution of future leaders. The Company also renewed its emphasis on brand building by capitalizing on the commissioning of the historic Thar Project.
Engro also highlighted that the recently announced investment in telecom infrastructure through Enfrashare (Private) Limited and feasibility study to set up the polypropylene facility in Pakistan is progressing well. Enfrashare has acquired a portfolio of over 1,500 towers catering to Mobile Network Operators in Pakistan.