January 22, 2007
Engro Chemical Pakistan Ltd. announced its full-year results for the year 2006 on Monday, January 22, 2007. The profit after tax was Rs.2.55 billion which is a new record for the Company and is higher by 10% over the 2005 profit of Rs.2.32 billion. The higher profit was principally due to higher urea volumes because of better production and capital gain of Rs. 131 million on sale of land to Engro Asahi.
Company’s Operating Performance
Engro Urea production in 2006 of 969,000 tons, represented an increase of 6% over 2005, was the best ever yearly production achieved. Engro Urea sales of 945,000 tons registered a 6% increase over 2005 volume of 890,000 tons. Engro’s market share for the year in review remained at 19%.
The year 2006 proved to be a challenging year for Zarkhez as its sales declined by 33% to 77,000 tons against last year sales of 115,000 tons mainly due to the decline in acreage of important target crops and a change in strategy to focus more on value-added crops.
Engro’s overall phosphate sales volume was 388,000 tons which is the highest ever for this segment of business in any year. The share of phosphate market for 2006 was 23%.
The sales for the year were Rs. 17.6 billion, lower by 4%, due to decline in Zarkhez sales.
Subsidiaries and affiliates also performed well with record profits at Engro Asahi, Engro Vopak, and Engro Innovative while Engro Foods’ loss was lower than planned.
During 2006, Engro’s major diversification / growth initiatives were realized; which were:
- Gas allocation to setup new urea plant at an estimated cost of $950m
- Launch of Engro Asahi’s back integration project at an estimated cost of $220m
- Approval by PPIB of Engro Energy’s IPP costing approx. $220m
- Engro Foods commenced commercial operations and started work on their second plant
- Acquisition of US based automation company by Engro Innovative
- Launch of Engro Vopak’s Ethylene storage project costing approx. $30m
Over the next three years, Engro, its affiliates & subsidiaries will invest over $ 1.5 billion in these projects