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Engro’s Profits Surge to Over Rs. 14 Billion

Pakistan’s premier conglomerate, Engro Corporation (PSX: ENGRO) announced its financial results for the quarter ended March 31st, 2021.

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The Company posted a 149% increase in consolidated Profit After Tax (PAT) to Rs. 14.779 billion compared to Rs. 5.940 million for a similar period last year

Engro’s consolidated revenue grew by 58% from Rs. 44.977 billion during Q1 2020 to Rs. 70.866 billion in Q1 2021. Profit attributable to the owners was recorded at Rs. 8.337 billion compared to Rs. 3.317 billion for the prior period, resulting in an Earnings per Share (EPS) of Rs. 14.47 compared to Rs. 5.76. This growth in the results is primarily attributable to the higher profitability reported by Engro Fertilizer and Engro Polymer & Chemicals.

On a standalone basis, the Company posted a profit of Rs. 3.586 billion against Rs. 780 million for the same period last year, translating into an EPS of PKR 6.22 per share. The Company announced an interim cash dividend of Rs. 12 per share for the first quarter.

Financial Performance – Segmental Perspective:

Fertilizers:

The domestic market witnessed strong agricultural sector performance in Q1 as farm economics continued to improve, driven by better farm output prices and enhanced support pricing. The Company produced 523 KT of Urea vs. 572 KT for the comparative period due to a turnaround in one of the plants. The Company delivered quarterly Urea sales of 582 KT vs. 169 KT and Phosphate sales of 74 KT vs. 36 KT during the same period last year. As a result, the PAT for the Company stood at Rs. 5.741 billion for Q1 2021 as compared to Rs. 571 million in the same period last year.

Petrochemicals:

During Q1 2021, international prices of PVC rose to an unprecedented level of USD 1,670 per ton as the winter storm in the US drove multiple unplanned shutdowns and forced the majority of the PVC capacity offline. Furthermore, the Company announced commercial operations of the new PVC plant on 1st March 2021, which increased the total capacity to 295,000 MT per annum.

During Q1 2021, the Company recorded a revenue of Rs. 15.671 billion as compared to Rs. 7.058 billion in Q1 2020. With increased volumetric sales, efficient operations and higher international prices, the Company posted a profit of Rs. 4.143 million compared to a PAT of Rs. 193 million for the same period last year. This is the highest quarterly profit ever achieved by Engro Polymer and Chemicals.

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Connectivity:

Engro continued to invest and progress in its Connectivity vertical through Engro Enfrashare strengthening its footprint to a portfolio size of 1,577 operational sites (1,265 sites in 2020), while hosting 1,681 tenancies (1,362 tenancies in 2020) and catering to all Mobile Network Operators (MNOs) in Pakistan. This portfolio expansion has led to a significant increase in the market share as an Independent TowerCo from 41% in 2020 to 44% during Q1 2021.

Energy & Power:

Mining and power plant operations at Thar continued smoothly, with over a million tons of coal being supplied by the mine. The plant remained fully operational and achieved 81% availability with a load factor of 76% and a dispatch of 987 GwH to the national grid during the quarter. Meanwhile, the expansion of the mine at Thar to increase output to 7.8 million tons per annum is underway.

The Qadirpur Power Plant operates on permeate gas and is currently facing gas curtailment from the Qadirpur gas field as it continues to deplete. To make up for this shortfall, the plant has been made available on mixed mode. The Plant dispatched a Net Electrical Output of 190 GwH to the national grid with a load factor of 41% compared to 37% during similar period last year. The business posted a profit of Rs. 399 million for the current period as compared to Rs. 895 million for Q1 2020, which is mainly attributable to the retirement of the debt component.

Terminals:

The profitability of both the LNG and chemicals terminal remained healthy for the current quarter. The LNG terminal handled 18 cargoes, delivering 52.8 bcf re-gasified LNG into the SSGC network. The chemicals terminal had an actual throughput of 286 kT vs. 246 kT during a similar quarter last year. The increase was primarily observed in chemical volumes, offset by lower LPG handling.

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