Engro Polymer Reports Loss Amid Market Challenges and Strategic Shifts

Karachi: Engro Polymer and Chemicals Limited (EPCL) presented its financial results for the first quarter of the calendar year 2025, revealing a loss of PkR825 million. This figure, though improved from the previous year’s loss of PkR901 million, highlights ongoing challenges in the market, notably due to declining Ethylene-PVC core delta margins and increased gas prices.

The company reported a 20% year-over-year increase in PVC sales, totaling 54,000 tons, against the backdrop of a 23% rise in overall industry demand. This growth was driven by low international PVC prices, currently at US$700 per ton, influenced by weak construction demand in major economies like China and the United States.

Ethylene prices remained stable, ranging between US$910 and US$940 per ton, contributing to compressed PVC core delta margins, which averaged US$275 per ton. Meanwhile, caustic prices increased due to a tight supply earlier in the quarter.

Looking ahead, EPCL’s management is optimistic about PVC sales recovering as construction activities are expected to improve with declining interest rates. However, PVC prices may remain pressured due to potential U.S. tariffs and India’s anti-dumping duty, which could lead to increased dumping in markets like Pakistan.

Gas availability at competitive rates continues to be a hurdle for EPCL. While conversion to the national grid is not feasible, the company is exploring alternative energy solutions. The captive gas tariff has risen to PkR4,291 per mmbtu, with an additional levy of PkR791 per mmbtu under judicial review in the Islamabad High Court.

On the expansion front, EPCL successfully commissioned its High-Temperature Direct Chlorination and Hydrogen Peroxide projects during the quarter. The company plans to utilize 12,000 tons of its 28,000-ton annual capacity for hydrogen peroxide production this year.

Despite these developments, analysts from AKD Securities Limited maintain a ‘SELL’ stance on EPCL, citing persistent high energy costs and depressed core margins as factors likely to challenge profitability, with a target price set at PkR30 per share by December 2025.