Engro Polymer & Chemicals Limited (EPCL) announced its 9MCY24 financial result today where the company posted a loss of Rs. 2,288 million (LPS: PKR 2.52) compared to a profit of Rs. 5,386 million (EPS: PKR 5.93) in SPLY. Whereas, loss in 3QCY24 clocked in at Rs. 698 million (LPS: PKR 0.77).
Net sales in 9MCY24 clocked in at Rs. 54.5 billion, down by 12 percent YoY. Moreover, the top line declined by 20 percent YoY to Rs. 20.1 billion during 3QCY24. This decline is attributable to a decline in PVC prices which went down by 3 percent YoY in USD terms, according to Arif Habib Limited.
The gross profit margin in 9MCY24 arrived at 6.6 percent compared to 25.6 percent during SPLY due to higher gas prices and subdued PVC margins. The gross margins during the quarter declined to 5.5 percent, down by 20 pps YoY due to the aforementioned reasons.
The finance cost climbed up by 59 percent YoY, arriving at Rs. 1,964 million during 3QCY24 amid a jump in short-term borrowings. On a sequential basis, the finance cost declined by 8 percent YoY, which is attributable to a decline in interest rates.
Other income plummeted by 48 percent YoY to Rs. 194 million during 3QCY24 due to lower short-term investments.
The company booked a tax reversal of Rs. 749 million in 3QCY24 compared to taxation of Rs. 1,769 million in 3QCY23.
PVC margins are expected to remain constrained due to the global economic slowdown and sluggish construction activity. This trend poses a downside risk to EPCL’s profitability, as it faces headwinds from lower product pricing due to weaker demand fundamentals.