Karachi, Wednesday October 19, 2022: Engro Corporation (PSX: ENGRO), Pakistan’s premier conglomerate, announced its financial results for nine months of the year ending September 30, 2022.

Overview of Financial Performance

Engro Corporation’s standalone revenue increased from PKR 16 billion in 9M 2021 to PKR 19 billion in 9M 2022, exhibiting a growth of 19%. The revenue growth was primarily due to higher dividends received from Engro Polymer & Chemicals Limited (EPCL) and Engro Fertilizers Limited (EFERT) which, in turn, were driven by strong underlying business performance. Conversely, the Company posted a 3% decline in PAT of PKR 15.6 billion in 9M 2022 against PKR 16 billion in 9M 2021, on account of imposition of super tax which has been partially net off by higher dividends from the Polymer & Chemicals, Fertilizer, Energy businesses and higher interest income.

On a consolidated basis, Engro Corporation’s revenue grew by 20% to PKR 269 billion in 9M 2022 from PKR 224 billion in 9M 2021. The Company posted a PAT of PKR 31 billion in 9M 2022, which is 24% lower than PKR 41 billion in 9M 2021. The PAT attributable to the shareholders is PKR 15 billion, translating into an EPS of PKR 26.78 per share (9M 2021: PKR 40.22 per share). Major variances were driven by super tax on current and prior year earnings and a one-off tariff true-up adjustment at Engro Powergen Thar Limited (EPTL).

Engro Corporation announced an interim cash dividend of PKR 10/- per share for the year. This is in addition to the PKR 23/- per share dividend that has already been announced during the year, bringing the cumulative payout to PKR 33/- per share.

Portfolio Performance Review          

Fertilizers: EFERT sales stood at 1,522 KT versus 1,744 KT for the comparative period due to dispatch timing difference last year. High price of phosphate and devastating floods drove a decline in the sale of Phosphates to 212 KT from 242 KT during the same period in 2021. EFERT contributed ~USD 1.1 billion in import substitution for Pakistan and sold urea at a discount of ~77% against the international prices.

Profitability of the business was impacted by super tax to the tune of PKR 5.5 billion. EFERT posted a PAT of PKR 9.6 billion in 9M 2022 vs PKR 14.9 billion in 9M 2021.

Petrochemicals: The petrochemicals business continued its upward momentum and EPCL sales increased to 171 KT in 9M 2022 against 153 KT in 9M 2021. Timely expansion and operational reliability supported Pakistan in avoiding USD 95 million incremental outflow in the form of import substitution.

EPCL recorded revenue of PKR 62.3 billion in 9M 2022 compared to PKR 49.3 billion in 9M 2021. The 26% increase is attributable to higher PVC volumes. EPCL reported a PAT of PKR 9.3 billion in 9M 2022 against PKR 10.3 billion in 9M 2021, primarily due to the super tax impact of PKR 2.1 billion.

Telecommunication Infrastructure: Expansion continued for the telecommunication infrastructure vertical at Engro, with Engro Enfrashare growing its national tower-print to 3,132 sites by the end of 9M 2022, servicing all of Pakistan’s mobile network providers. This doubled the revenue growth of Engro Enfrashare in 9M 2022 in comparison to the same period last year.

Engro Enfrashare is well-positioned to enable the colocation model, while enhancing services to all customers as reflected in the 139% hike in colocation tenants versus last year. Engro Enfrashare is on track to capture future sectoral growth with its high value-add proposition, complemented by economies of scale.

Foods & Rice: Engro Eximp Agriproducts continued its excellence in the rice export business, recording 54% growth in volumes versus the same period last year (42.1 KT versus 27.4 KT). During the nine months, the rice business generated a revenue of USD 28 million through exports versus USD 15 million in 9M 2021 on the back of higher sales, better margins, and PKR devaluation. The business continued expanding its footprint in the local market and increased domestic volumes by 8% to 10 KT in 9M 2022 against 9.3 KT in the same period last year.

The results of FrieslandCampina Engro Pakistan Ltd will form part of our Directors Report as it is a listed entity, and its results will be announced in due course.

Energy & Power: Mining operations continued smoothly, and the Mine supplied 2.4 million tons of coal to Engro Powergen Thar Limited during the nine-month period. Sindh Engro Coal Mine successfully completed Phase II expansion, doubling its existing capacity to 7.6 million tons per annum with effect from October 1, 2022.

Engro Powergen Thar Limited achieved a collection of 89% from inception to date, bringing it at par with other coal IPPs. During the first half, the Plant achieved 68% availability, dispatching 2,655 GwH to the national grid. The Plant availability remained low due to outage following an incident on the coal conveyor belt. After detailed inspection and necessary rehabilitation work, both units of the Plant are successfully back online.

Due to a scheduled shutdown for major inspection, the EPQL Plant dispatched a Net Electrical Output of 558 GwH to the national grid against 615 GwH in the same period last year. The business posted a PAT of PKR 1,377 million for the current period as compared to PKR 1,463 million for same period last year, primarily on account of higher financing cost.

Terminals: Engro Elengy Terminal enabled ~13% of the total gas supply to Pakistan. It handled 55 cargoes, delivering 111 bcf re-gasified LNG into the SSGC network. Engro Vopak Terminal had an actual throughput of 1,082 KT against 1,010 KT during the same period last year. The increase was primarily observed in chemical volumes.