Engro Corporation Manages 12% Increase in Profit for Q3 2017

Engro Corporation today announced its 3rd Quarter results showcasing a strong overall performance in its businesses. Profitability was augmented by the steady performances of terminal services and power, fertilizer, petrochemicals and the signing of major financial agreements for SECMC.

Engro Corporation announced Q3 2017 profit after tax of Rs 4.9 billion up by 12% YoY as compared to Rs 4.4 billion in the same period last year.

Earning per share increased to Rs 5.99 from Rs 5.85 as of last year. The company announced better than expected interim cash dividend of PKR 7/share.

Amid YoY fall in EFERT/EFOODS profits, polymer segment and likely higher contribution from LNG segment supported bottom line during Q3.

While lower distribution expenses and 27% fall in finance cost also supported profits. On sequential basis, profits surged 2.6x QoQ, mainly due to absence of hefty super tax booked in Q2.

Gross profit of the company was improved by 5% to Rs 9.2 billion driven by improvement in Fertilizer and Polymer business.

On a consolidated basis, Engro Corporation’s revenue was PKR 86.41 billion for the first three quarters of 2017, a 20% decrease from PKR 107.83 billion for the comparative period last year.

The reduction is due to the fact that Engro Foods results are no longer consolidated in Engro Corporation results as a consequence of its partial divestment late in 2016.

Excluding Engro Foods turnover of the previous period, revenue grew by 18%. Improved market fundamentals throughout the period resulted in improved profitability in the fertilizer and petrochemicals businesses.
Engro’s script closed at Rs 294.64 at the PSX on Thursday.

Cumulatively in 9 months, earnings have declined 19% YoY to PKR 6.9 billion. The fall in earnings can largely be attributed to higher effective tax rates plus lower contribution from EFOODS, both due to lower profits and reduced stake post divestment (40% vs. 87% in SPLY).

Earning per share decreased to 13% to Rs 13.20 for the nine months. Engro Corporation’s long-term rating was upgraded to AA while maintaining a short-term rating of A1+.