Karachi, October 31, 2012: The Board of Directors of Engro Corporation Limited today announced the financial results for the nine months ended, September 30, 2012.
Gas curtailment caused by the flagrant violation of the contractual obligations by SNGPL has severely impacted the operations of the fertilizer business. Consequently, the business made a net loss of Rs. 2,978 million during the nine months under review vs. a net profit of Rs. 3,510 million during the same period last year. The loss is directly attributable to decreased sales volume, lower margins, declining farm economics, and absence of speculative buying due to expectation of a reduction in the price. The Company produced 709,000 tons of Urea during the nine months of 2012 compared to 983,000 tons produced in the same period of previous year. This decrease was attributable to the gas curtailment on the new EnVen plant which received gas for only 45 days allowing for only 33 days of production in the period under review.
On the contrary, the foods business continued its rapid growth trajectory registering a turnover increase of 38% to Rs. 29 billion during the nine months of 2012 as compared to Rs. 21 billion for the corresponding period last year. The business announced a profit after tax of Rs. 1,619 million in the nine months of 2012 as opposed to Rs. 408 million during the same period last year. In addition, the Company’s investment in the Halal Foods business in Canada, Al Safa, also achieved sizable sales revenue of Canadian $ 8.8 million during the nine months of 2012.
The petrochemicals business saw an increase in domestic PVC sales to 112 Ktons during the nine months of 2012, as compared to 85 Ktons in the corresponding period last year. The business posted a net profit of Rs. 83 million for the nine months ended September 30, 2012, compared to a loss of Rs. 440 million during the same period last year. The higher profitability was mainly attributable to increased volumes, higher caustic prices as compared to the same period last year, and insurance claim proceeds received on account of delayed start up claim resulting from the plant site fire incident in December 2009.
During the nine months of 2012, the Engro Qadirpur Powergen plant dispatched a total of 1,316 GWh to the national grid and demonstrated a billable availability of 100.3%. The business declared a net profit of Rs. 1,571 million for the nine months ended September 30, 2012 as compared to a profit of Rs. 1,239 million during the same period last year. The increase is due to higher gas efficiency and initiatives taken to ensure plant reliability and availability to the national grid. However, the substantial rise in the receivables due to circular debt is a major cause of concern for the business and the Company has been actively chasing PEPCO to reduce the overdue receivable amount. In September 2012 the Company received an amount of Rs. 1,1,95 million from the Government of Pakistan on account of a bail-out package which was adjusted by the transaction agent, National Bank of Pakistan (NBP) for direct payment to SNGPL.
On the Sindh Engro Coal Mining (SECMC) front, the Company is actively pursuing different parties for possible coal off-take agreements specifically after the change of strategy to decouple the mining and power projects. The policy has also been endorsed by the Government of Pakistan who has expressed full support for the project and has directed its GENCO Jamshoro to enter into a coal off-take agreement with SECMC for both conversion and new coal-fired plants envisaged by GENCO Jamshoro. The government has also agreed to provide Sovereign Guarantee for servicing debt portion of the cost and the Company will now, therefore, direct its efforts to formalize the above mentioned commitments given by the GoP.
The chemical storage and handling business – Engro Vopak Terminal Limited (EVTL) – had smooth operations during the nine months of 2012 and posted a net profit of Rs. 1,098 million for the nine months ended September 30, 2012 as compared to a net profit of Rs. 781 million during the same period last year.
The consolidated revenue of the Company stood at Rs. 83 billion for the nine months of 2012, as compared to Rs. 79 billion in the same period last year, while net loss after tax (attributable to equity holders of the holding company,) was Rs. 443 million as compared to a net profit after tax of Rs. 5,590 million in the same period last year. The Company announced an EPS of Rs. (0.87) for the nine months ended September 30, 2012 as opposed to an EPS of Rs. 10.88 during the same period last year.
Due to worsening gas supply situation, the company has been working on securing off-network sources of gas. Proposals for short term and long term solutions in this regard are under consideration by various government bodies.
For the remaining year the Company expects to consolidate performance across the subsidiaries and continue working with stakeholders to pursue growth and value creation across the board.