Engro Corporation Limited (ENGRO) has unveiled its financial performance for the first half of CY23, showcasing a consolidated profit after tax of PKR 10,574 million (earnings per share: PKR 19.70). This marks a robust year-on-year increase of 43%. Delving into the quarterly results, the consolidated earnings for this period amounted to PKR 5,927 million (EPS: PKR 11.04), a substantial turnaround from the loss of PKR 558 million (LPS: PKR 1.04) incurred in the corresponding quarter. Adding to the announcement, the company has declared a cash dividend of PKR 2.00 per share for the second quarter of CY23, which accumulates to a total of PKR 42.00 per share for the first half of the year.
Key Points from the Results:
Fertilizer Business Performance: ENGRO’s fertilizer arm, EFERT, displayed a significant improvement in profitability during the second quarter of CY23. The segment reported a profit of PKR 1,060 million (EPS: PKR 0.79), in contrast to a loss of PKR 98 million (LPS: PKR 0.07) in the same period last year. This turnaround is attributed to a 44% surge in urea prices and a 6% increase in DAP prices year-on-year, alongside reduced deferred tax liability adjustments.
Engro Polymer & Chemicals Limited (EPCL): The net profit of EPCL in the second quarter of CY23 stood at PKR 1,562 million (EPS: PKR 1.72), reflecting a 33% decline compared to the previous year. This drop is attributed to lower international PVC margins, heightened finance costs, and an increase in gas prices.
Engro Powergen Qadirpur Pakistan Limited (EPQL): EPQL achieved a Profit after Tax of PKR 783 million (EPS: PKR 2.42) during the second quarter of CY23, marking a significant YoY increase of 3.1 times. This growth can be attributed to the application of a higher period weighting factor to capacity payments.
Frieslandcampina Engro Pakistan Limited (FCEPL): FCEPL achieved a bottom-line of PKR 336 million (EPS: PKR 0.44), indicating a substantial 36% year-on-year growth during the second quarter of CY23. This growth can be attributed to a 174 basis point improvement in gross margins, reaching 13.77%, driven by higher sales volumes.
Thar and Elengy Businesses: Contribution from the Thar business (EPTL & SECMC) and the Elengy business during the second quarter of CY23 are estimated to be PKR 4,479 million and PKR 752 million, respectively.
ENGRO witnessed a 22% YoY growth in other income during the second quarter of CY23, attributed to increased income from cash and cash balances. However, finance costs experienced a substantial 66% YoY growth due to higher interest rates.
Effective Taxation and Super Tax: The effective taxation for ENGRO in the second quarter of CY23 stood at 52%, compared to 88% in the same period of the previous year. This taxation includes an additional 6% super tax applied to the profit before tax for CY22 and 1HCY23.
ENGRO’s financial performance in the first half of CY23 reflects its resilience and capacity for growth, presenting a dynamic outlook for the company’s future endeavors.
ENGRO Corp June-2023 Financial Results
| ( PKR mn ) | 1HCY23a | 1HCY22a | YOY | 2QCY23a | 2QCY22a | YOY | QOQ |
| Net Sales | 202,482 | 177,455 | 14 % | 105,150 | 89 , 122 | 18 % | 8 % |
| Gross Profit | 61,217 | 54,173 | 13 % | 35,654 | 26,955 | 32 % | 39 % |
| Other income | 13,751 | 9,623 | 43 % | 6,896 | 5,637 | 22 % | 1 % |
| Other expenses | 3,245 | 6,431 | -50 % | 1,457 | 4,173 | -65 % | -18 % |
| Finance Cost | 22,496 | 12,002 | 87 % | 11,391 | 6,874 | 66 % | 3 % |
| PBT | 39,773 | 37,090 | 7 % | 26,151 | 16,285 | 61 % | 92 % |
| PAT / ( LAT ) * | 10,574 | 7,414 | 43 % | 5,927 | ( 558 ) | nm | 28 % |
| EPS / ( LPS ) ( PKR ) | 19.70 | 13.82 | 11.04 | ( 1.04 ) | |||
| DPS ( PKR ) | 42.00 | 23.00 | 2.00 | 11.00 |
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