The Board of Directors of Engro Corporation Limited (ENGRO) announced its financial results for the year ended December 31, 2019. The company experienced profit for the full-year 2019 jumped 30 percent to Rs16.532 billion on strong fertiliser and chemical business earnings.
Earnings per share remained at Rs28.69 as compared to an EPS of Rs22.06 last year. Engro also announced final dividend of Rs1/share, equivalent to 10 percent, in addition to interim dividend of Rs23/share (230 percent) it announced earlier.
On the fertiliser business front, Engro Fertilizers Limited posted a 23 percent year-on-year growth in profitability to Rs6.361 billion during 4QCY19 amid 28 percent year-on-year growth in urea off-take tagged with 18 percent year-on-year higher urea prices during the period.
Profitability of Engro Polymer & Chemicals Limited (EPCL) clocked in at Rs882 million, down 17 percent year-on-year, given lower gross margins owing to higher gas prices tagged with a one-off insurance claim during 4QCY18.
Additionally, FrieslandCampina Engro Pakistan Limited posted a loss after tax of Rs146 million
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.
