Karachi, 14 February 2010
The Board of Directors of Engro Corporation Limited has announced the achievement of the Company’s highest-ever Profit after Tax of Rs 6.8 billion, for the year ended December 31, 2010.
Overview of 2010
The consolidated revenue stood at 79.9 billion for the year ended December 31, 2010, as compared to 58.2 billion in 2009. The company announced earnings per share (EPS) of Rs 20.72 for 2010, as compared to an EPS of Rs 12.24 in 2009. A final cash dividend of 20% (Rs 2) per share has been approved by the Board, making a total dividend of Rs 6 for 2010. The Board has also recommended the issuance of 20 % bonus shares (1 share to every 5 shares held).
In 2010, the urea industry declined to 6.1 m tons (from 6.5m in 2009) due to the floods which reduced Kharif demand. We produced 972,000 tons of urea, and sold 949,000 tons of urea, with 22,000 tons consumed in Zarkhez operations, and maintained a full year share of 15% of the fertilizer market. In 2010, the business also completed construction on the world’s largest single train ammonia-urea plant, with a capacity of 1.3m tons. The business earned a profit of Rs 3.7 billion on revenues of Ts. 19 billion. The phosphates industry declined to 1.4m tons from 1.8m tons. Engro Eximp sold 329kt of phosphates vs 357kt in 2009.
In 2010, the foods business achieved volume growth of 27% in the processed milk segment, increasing volumes to 309 million liters from 243 million liters in 2009. The business achieved overall profitability in 2010, reaching the target earlier than planned, as well as beginning operations at the rice processing plant in Muridke, with sales expected to begin in 2011. The business on revenues of Rs 21 billion, earned a profit of Rs 177 million.
The petrochemical business began production from its VCM plant in the year, hence initiating full operations from the integrated facility. Production was lower than capacity due to limited availability of VCM and some operational constraints. The business on revenues of Rs 14.6 billion, had loss of Rs 770 million.
Energy & Power
2010 also marked the beginning of commercial operations at the Company’s energy plant in Qadirpur, which is Engro’s first venture into the energy & power sector. The plant demonstrated a billable availability factor of 95%, despite being its first year of operation and dispatched a total net power of 1,201 GWh to the national grid. In 2010, the Sindh Engro Coal Mining Company Limited (SECMC) completed the detailed feasibility study (DFS) as per the target deadline, confirming the technical, social and environmental viability of the Thar Coal Mining Project. The business earned a profit of Rs 1.1 billion on revenues of Rs.5.7 billion
Chemical Storage & Terminal
The chemical terminal’s actual throughput for the year was 1,104 k tons vs. 1,063 k tons in 2009, including LPG import of 31 k tons vs 40 k tons in 2009. Engro Vopak also achieved a first in the history of LPG imports in the country by handling the largest ship (5,000 tons) to dock in Pakistan. The business on revenues of Rs 2.3 billion, earned a profit of Rs 1.1 billion.
Despite tough economic conditions, the automation and control engineering business had an increase in new business and revenues over the last year, although this revenue remained below breakeven point due to difficulties in its energy SBU. The business earned revenue of Rs 1.8 billion, with a loss of Rs 195 million. The commodity trade business successfully built relationships with premium buyers in international markets, and exported 5,000 tons of rice during the year.
Near Term Outlook and Challenges
The fertilizer business’s new expansion capacity will enable Pakistan to become self sufficient in urea, thereby saving significant foreign exchange. However, the GoP’s gas curtailment regime has reduced production as well as increasing cost of inputs to the farmers as well as having a negative impact on the economy through the import and subsidization of expensive urea.
The foods business will continue to increase market share in its dairy and ice cream segment. It plans its first international venture through its planned acquisition of ‘Al Safa Halal’ in America and Canada. The business will face on impact on volumes and margins if the proposed value added tax (VAT) in implemented in second half 2011.
PVC domestic demand is expected to be stable to strong in 2011 on account of reconstruction activities in flood affected areas, demand from the agricultural sector and pipe exports to Afghanistan. Smooth operation of the VCM plant will remain key to providing stable margins for the business.
With all its major expansion projects complete, Engro Corp plans to list some of its subsidiaries in 2011, these include Foods, Fertilizers & Powergen Qadirpur Limited.
For more Information:
Hussain Ali Talib at Engro Corporation Limited, Tel: 021-3529 7513, or
Uroos Ahmed at Xenith Public Relations, Tel: 021 – 35874867-70