Karachi, February 20, 2019 (PPI-OT): Pakistan’s premier conglomerate, Engro Corporation (PSX: ENGRO) announced its financial results for full year ended December 31st, 2018. The Company posted a consolidated profit-after-tax (PAT) of PKR 23,632 million – up by 45%, while PAT attributable to the shareholders increased to PKR 12,708 million from PKR 9,407 million during comparative period last year. Engro Corporation completed 2018 with revenue of PKR 171,568 million – 33% higher than PKR 128,593 million last year. Increase was primarily driven by improved fertilizers and petrochemicals performance.
On a standalone basis, the Company posted a PAT of PKR 12,720 million against PKR 11,390 million for the last year, translating into an EPS of PKR 24.28 per share. The Company announced a final cash dividend of PKR 2.00 per share for Q4 2018, bringing the cumulative dividend to PKR 21.00 per share for FY 2018. In addition to this, the Company also announced the issuance of 10% bonus shares.
Fertilizer business revenues grew by 42% whilst PAT for the current period increased by 56% versus comparative period and stood at PKR 17,414 million. The business witnessed an increase in revenue and profitability over the last year primarily due to both higher fertilizer offtake and prices, coupled with one-off deferred tax reversal (non-cash) due to reduction in the corporate tax rate from 30% to 25% in the coming years. The domestic fertilizer industry continues to face challenges in recovery of subsidy receivables.
For the Polymer business, 2018 proved to be a year of economic consolidation. The business completed debottlenecking of PVC and VCM with strong operational performance, realized higher local sales and completed ground work for expansion projects while developing a strong balance sheet. The business achieved record PVC production, witnessed a 27% increase in revenue and posted a PAT of PKR 4,930 million. However, the business faces gas supply risk which will need to be proactively managed.
Within Engro’s Energy portfolio, Qadirpur Power Plant continued to demonstrate a billable availability factor close to 100%. Due to depletion of permeate gas from the gas field, net electrical output to the National Grid was lower as compared to last year. Circular debt has been a persistent problem whereby receivables from power purchaser remained high. This poses a continuous challenge for the business and the power sector in general and needs urgent attention from the relevant authorities.
The development of Thar Coal project continues at full pace and remained on schedule. During June 2018, coal from the first seam of the open-pit mine was extracted from a depth of 140 meters below the surface. On Thar Power Plant front, the project development continues at a steady pace. During the year, the power plant was successfully connected with the National Grid for the purpose of receiving back-feed required for plant start-up. In partnership with the Government, both projects are expected to remain on track for completion by mid-2019 to help resolve the energy demand in the Country.
The LNG Terminal handled 74 cargoes as compared to 70 cargoes during last year. However, Chemicals Terminal witnessed a volumetric decrease over last year primarily due to lower imported LPG volumes. The growth of 45% in the consolidated profit after tax of Engro Corporation has been achieved despite the recognition of a one-time taxation related provision in the Chemicals Terminal business. The matter is being contested by the Company but has been provided as a matter of prudence.
As part of its portfolio management strategy, the Company subscribed to the right shares issued by Engro Polymer and Chemicals Ltd. during July 2018, amounting to PKR 3 billion. Further, the Company divested 30% of its shareholding in Elengy Terminal Pakistan to Royal Vopak during December 2018 – shareholding of the Company in Elengy Terminal now stands at 56%.
Keeping Human Capital as a top priority, Engro Corporation has established the Engro Leadership Academy with the purpose of developing current and future leaders, improving organization and talent management. This multi-year transformation program will offer a blended learning experience and the Academy is poised to become an integral part of the people transformation journey at Engro. 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.
For more information, contact:
Engro Corporation Limited
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Category: General Business News