Karachi, August 19, 2015: The Board of Directors of Engro Corporation announced its1H 2015 results, showcasing strong performance from its fertilizers, foods and LNG businesses, slightly offset by performances of the petrochemical and the rice businesses. The Company continued to reflect strong shareholder return and announced a dividend of Rs. 4/share which is in addition to the Rs. 2/share dividend announced at the end of the first quarter.
On a consolidated basis, Engro Corporation recorded a 13% increase in revenue, up from PKR 77.5 billion in 1H14 to PKR87.8billion in 1H15. The earnings also increased significantly on the back of better margins in its foods and fertilizer businesses, coupled with commencement of commercial operations at its LNG terminal and curtailment of losses in the rice business. The profit-after-tax grew from PKR 2,684 million in 1H14 to PKR 8,005 million in 1H15, posting an increase of 3 times over the same period last year.
The fertilizers business urea production for 1H’15 stood at 950 KT as compared to 847 KT in the comparative period last year i.e. an increase of 12%, mainly due to continuous two plant operation, lower outage days and better gas supply. Consequently, the fertilizer business clocked in consolidated revenues of PKR 38.3 billion in 1H’15 as compared to PKR 27.7 billion. The increase represents higher sales volumes due to higher production as well as revenues generated from trading business which is now in-house. The net consolidated profit-after-tax for the period stood at PKR 6,855 million as compared to PKR 3,375 million for the same period last year.
The foods business showcased a stellar turnaround and attained a revenue growth of 24% mainly on back of strong performance in the dairy segment spurred by favorable commodity prices and effective pricing strategy. Revenue for the period was PKR 24.9 billion versus PKR 20.1 billion in the same period last year, while the overall profit-after-tax (PAT) stood at PKR 1,977 million versus PKR 329 million in the same period last year. The increase in PAT was largely due to higher volumes and cheaper milk procurement, fuel and energy costs.
For the petrochemicals business the year started with high PVC-Ethylene delta resulting in healthy margins for the company in 1Q’15 but it sharply fell during the second quarter on account of international price volatility. The business posted revenues of PKR 12.4 billion in 1H’15 versus PKR 11.9 billion in same period last year. However, despite higher sales volume, the company posted a loss-after-tax of PKR 433 million versus profit-after-tax of PKR 123 million for the same period last year.
On the energy front, during 1H’15 EngroPowergen Qadirpur Limited completed its turnaround activity (due every six years) utilizing 33 days of scheduled outage in April/May. At half-year, overdue receivables from PEPCO stood at PKR 1,673 million versus PKR 1,210 million at the last year-end. The overdue payables to SNGPL at half-year were PKR 250 million versus PKR 232 million at year-end. EPQL earned a PAT of PKR 951 million in 1H’15 versus PKR 1,088 million in the same period last year.
In 2014, Engro embarked on the journey to build Pakistan’s first LNG Storage and Regasification Terminal. The project was constructed ahead of time in a record period of 300 days and commissioned on March 29, 2015 – ranking it amongst the fastest built terminals in the world. As of June 30, 2015, the terminal has handled 5cargo shipments by FSRU shuttling to Qatar. The LNG handled during the period was 324,620 MT.
On the Thar Coal project front, mining activities of Sindh Engro Coal Mining Company (SECMC) remained on track as per schedule whereas on the coal power project, the Company made headway on various fronts. During the first half, generation license has been issued and the upfront tariff has been notified. Moreover, the Companyhas entered in to Power Purchase Agreement with National Transmission and Dispatch Company, Implementation Agreement and Supplemental to the Implementation Agreement with PPIB on behalf of Government of Pakistan and also signed Coal Supply Agreement with SECMC whereby SECMC, on commencement of commercial production of its Thar mining project, will supply 3.8 million tons per annum of coal to the company.
EngroVopak Terminal Limited (EVTL) also continued to showcase strong performance with increase in top and bottom line mainly due to positive tariff impact of LPG import as SSGC’s terminal remained closed for a few months on account of operational issues – resultantly, all LPG imported to the country during that period was handled by EVTL.