Karachi, February 21st, 2020: Pakistan’s premier conglomerate, Engro Corporation (PSX: ENGRO) announced its inancial results for the financial year ended December 31st, 2019.
Consolidated revenue grew by 32% in comparison to the year ended December 31st, 2018, mainly driven by energy projects in Thar coming online during July 2019 and augmented by higher turnover of Fertilizers and Petrochemicals businesses. The Company posted a consolidated profit after tax (PAT) of PKR 30,288 million compared to PKR 23,632 million for last year. Profit attributable to the owners was recorded at PKR 16,533 million compared to PKR 12,708 million for last year.
This growth in profitability is after accounting for a provision of PKR 1,224 million relating to impairment of the Company’s investment in FrieslandCampina Engro Pakistan Limited, under the requirements of International Accounting Standard 36 (Impairment of Assets).
On a standalone basis, the Company posted a PAT of PKR 14,303 million against PKR 12,720 million for the comparative year, translating into an EPS of PKR 24.83 per share. This increase is primarily attributed to higher dividends from subsidiaries as well as higher interest income on investable reserves.
The Company announced a final cash dividend of PKR 1.00 per share for the fourth quarter, bringing the cumulative payout for the year to PKR 24.00 per share.
Fertilizer business achieved a historic milestone of highest ever Urea production of 2 million tons due to better plant efficiency and higher gas availability. This, coupled with higher fertilizer prices, has resulted in an increase of 11% in sales revenue over the prior year. The business recorded a PAT of PKR 16,871 million – down by 3% from last year – decrease mainly attributed to a one-off deferred tax impact of higher future corporate tax rates introduced through Finance Act, 2019. Urea prices are expected to remain under pressure following a prospective reduction in GIDC. In response to this reduction, the business passed on the benefit to the end consumer through a price reduction of PKR 160/bag. Furthermore, the fertilizer industry continues to face challenges in the recovery of long outstanding subsidy and retrospective settlement of GIDC.
Polymer business recorded a revenue growth of 7%, while PAT was PKR 3,661 million compared to PKR 4,930 million for last year. This fall in profits is attributable to inflationary impacts in the form of higher energy prices and interest rates coupled with one-off gains recorded in 2018. In line with its long-term strategy, the business successfully initiated commercial production and commenced exports from its Caustic Flake plant.
Development of the 3.8 Mt per annum mine at Thar concluded with the successful ‘Test on Completion’ on June 3rd, 2019. Thereafter, Commercial Operations Date (COD) was declared on July 10th , 2019 for both mining and power projects and the Thar power plant has been running smoothly ever since. Further, the project commenced construction of Phase II of the mine expansion and achieved Financial Close on December 31st, 2019, which will enhance production of coal from the mine to 7.6 Mt per annum.
The Qadirpur Power Plant continued to demonstrate excellence with a Net Electrical Output of 1,097 GwH to the National Grid. Receivables from power purchaser remained high and are becoming a continuous challenge for the business and the power sector in general and need urgent attention from the relevant authorities. Elengy Terminal handled 74 cargoes in line with last year. The LNG terminal currently fulfills more than 12% of the country’s gas requirements. The Engro Vopak Terminal witnessed a volumetric increase of 6% for chemicals and LPG handled over last year, which is mainly attributable to higher chemical imports.
During the year, Engro expanded its focus on investing in human capital and people development, paving way for evolution of future leaders. The Company also renewed its emphasis on brand building by capitalizing on the commissioning of the historic Thar Project. With this accomplishment, Engro is using indigenous resources to help alleviate the energy crisis and has, once again, proven its ability to deliver on mega projects that enable development for the people of Pakistan.
Engro also accomplished the most complex digital business transformation ever witnessed in Pakistan through the One-SAP initiative. This transformation journey made news on all international forums of SAP, leading the Company to win SAP Quality Awards for MENA region. With this initiative, Engro becomes Pakistan’s first ever SAP Customer to be a permanent member of SAP Executive Advisory Council. One-SAP aims to bring synergies, group wide visibility, increased efficiencies and improved governance for the Company.
Engro made its mark on various forums during the year and was recognized as Pakistan’s most Outstanding Company in the Industrial Sector at Asiamoney, Asia’s Outstanding Companies Poll in 2019. The Company also continued to foster strong investor relations and was awarded Best Investor Relations (Runner-Up) at the CFA Society Pakistan’s 16th Annual Excellence Awards. During the year, the Company also won PSX Top 25 Companies of the Year award and was recognized globally at the UN Global Compact Sustainability Awards where it won “Living the UNGC Business Sustainability Award”.
Investing today for a better tomorrow for Pakistan is at the cornerstone of every Engro business. Engro also highlighted that the recently announced investment in telecom infrastructure through Enfrashare (Private) Limited and feasibility study to set up the polypropylene facility in Pakistan were progressing well. Enfrashare has acquired a portfolio of over 1,500 towers catering to Mobile Network Operators in Pakistan.
Engro is well placed to make a major contribution in helping solve some of the country’s pressing issues and improve the lives of the people of Pakistan. The Company continues to concentrate on creating long-term sustainable shareholder value by optimizing capital allocation to desired sectors in line with its capital allocation strategy.