Pakistan’s premier conglomerate, Engro Corporation announced its financial results for the quarter that ended March 31st, 2020.
The company posted a consolidated profit after tax (PAT) of Rs. 5.94 billion, down by 9.45% as compared to Rs. 6.56 billion for the similar period last year.
Engro’s consolidated revenue grew by 11% in comparison to the prior period, mainly driven by energy projects in Thar coming online during July 2019 and offset by a lower turnover of Fertilizers and Petrochemicals businesses. The
On a standalone basis, the company posted a profit of Rs. 780 million, decreasing by 80% against Rs. 3.83 billion for the same period last year, translating into an EPS of Rs. 1.35 per share.
The company noted that this decrease is primarily attributed to delays in receipts of dividends from subsidiaries as their Annual General Meetings (AGMs) have been postponed on account of the COVID-19 lockdown. This is, therefore, a temporary timing difference between quarters and not reflective of the underlying performance of the company.
The Company announced an interim cash dividend of Rs. 6 per share for the first quarter. Like in the past, the Board has endeavored to maximize dividends on a quarterly basis, however, the future dividends for the year would be based upon prevailing situation and earnings for the year.
The portfolio of Engro Corporation is resilient in these difficult times and the Company remains confident that despite challenging circumstances, it will be able to maintain a healthy performance in upcoming quarters.
Volumetric sales for the Fertilizer business were lower due to price disparity prevalent during the quarter, which was eliminated by the period-end. Revenue was lower by 54% as compared to the same period last year. PAT for the period stood at Rs. 571 million against Rs. 4.00 billion in the comparative period owing to lower offtake and increased finance cost due to higher policy rates and exchange loss on foreign currency borrowings. The fertilizer industry continues to face challenges in the recovery of long outstanding subsidy.
The Polymer business resumed operations on 20th April 2020 after a closure of approximately one month in compliance with the lockdown directives issued by the provincial government. Due to limited days of operations, production remained lower and resultantly, the business recorded lower revenue of Rs. 7.05 billion compared to Rs. 9.34 billion in the same period last year and posted a profit of Rs. 193 million compared to Rs. 1.09 billion for the same period last year.
Mining and power plant operations at Thar continued smoothly, with over a million tons of coal being supplied by the mine and dispatch of 1,091 GwH to the national grid during the quarter. The Qadirpur Power Plant operates on permeate gas and is currently facing gas curtailment from the Qadirpur gas field as it depletes. The Plant dispatched a Net Electrical Output of 172 GwH to the national grid with a load factor of 37% compared to 67% during similar period last year.
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.
Terminals businesses remained on track. Owing to the ongoing pandemic resulting in reduced economic activity, reduced nomination from the gas customer can be a potential challenge.