Karachi, August 22: The Board of Directors of Engro Corporation Limited today announced the financial results for the first half ended June 30, 2013.
Engro continued its positive turnaround during the second quarter of 2013 showing an excellent improvement in results. Company’s consolidated revenues increased by 25% to Rs. 66,874 million in 1H 2013 while net profit (attributable to the equity holders of the holding company) was Rs. 3,441 million as compared to a net loss of Rs. 340 million during the same period last year. The return to profitability is mainly attributable to the fertilizer and polymer businesses increased production and better results.
Our fertilizer business reported its highest ever six month revenue of PKR 20.5 billion during 1H 2013. It also recorded a highest ever six month urea sales volume of 622 KT during 1H 2013, attributable to increased production on the back of continued operation of Enven Plant on Mari gas as well as lower imports and higher off-takes in anticipation of GST and gas price increase. The increase in sales is 57% higher than 1H 2012 volume of 397 KT.
The Company received rota gas from SNGPL for 28 days during 2Q. Subsequently Engro’s market share in the total urea market increased to 23% in 1H 2013 from 14% in the same period last year. Market share within domestically-produced urea market also improved to 28%, as compared to 20% in the same period last year.
During 1H 2013, Engro Foods revenue fell by 4.3%, driven by a slowdown in consumer demand and due to distribution issues in certain cities, electoral process in the country, deteriorating law and order situation and severe power crisis. Despite lower revenues, profit after tax was 9% higher than the same period last year.
The company is in process of revamping its distribution structure to support the growth trajectory going forward. The ice cream business reported revenue of Rs 1,441 million, a decrease of Rs. 114 million as compared to the same period last year. The industry declined by 17% due to ongoing load shedding. The segment made an operational loss of Rs. 125 million versus a loss of Rs. 166 million in 1H 2012. The Nara Farm registered a loss of Rs. 115 million as compared to a profit of Rs. 4.8 million in 2012 mainly due to a dip in the value of animals in the international market in the first half of 2013 and inflation in animal feed cost.
Al-Safa Halal– a halal meat brand, with operations spread in Canada and North America – posted sales of CAD5.0 million (first half of 2012: CAD5.7 million).
Engro Polymers’ revenue grew by 27% in 1H 2013 versus 1H 2012. Growth was driven mainly by higher prices and higher VCM exports. Higher sales along with good margins led to a profit after tax of Rs. 425 million as compared to Rs. 59 million in 1H 2012. Production operations remained smooth throughout the period with VCM production showing a 25% growth over the same period last year. Most of the VCM was consumed in-house while the surplus production of about 10kT was exported. Total VCM exports during the same period last year amounted to 3K tons.
In 1H 2013, the Qadirpur Power Plant dispatched a total Net Electrical Output of 796 GwH with a lower load factor versus 1H 2012 due to a turnaround. In June, the entire overdue receivables of PKR 9 billion outstanding at the beginning of June 2013 were paid by PEPCO as part of a bailout for power sector.
The Sindh Engro Coal Mining Company (SECMC) achieved substantial progress on mining activities during the last quarter. During the period, SECMC set up a wholly owned subsidiary, Thar Power Company Limited. It signed MoU with KESC for supplying 600 MW of electricity and is also in discussions with NTDC.
Chemical Storage & Handling
Engro Vopak’s revenues and profitability are lower versus last year due to revised lower tariffs on paraxylene and acetic acid came into effect this year. The company continues to perform well and is well placed to play a role in LNG import to alleviate the gas crisis facing the country.