Engro Corporation’s revenues for 1H2015 increased by 13 percent to Rs 87.8 billion as compared to Rs 77.5 billion of 1H2014, the company said on Wednesday. The conglomerate, however, saw its petrochemicals business posting a loss-after-tax of Rs 433 million for the period under review, thanks to international price volatility.
The company’s Board of Directors announced its 1H2015 consolidated results, showcasing strong performance from its fertilisers, foods and LNG businesses, slightly offset by performances of the petrochemical and the rice businesses. The company continued to reflect strong shareholder return and announced a dividend of Rs 4 per share which is in addition to the Rs 2 per share dividend announced at the end of the first quarter.
“The earnings also increased significantly on the back of better margins in its foods and Fertilizer businesses, coupled with commencement of commercial operations at its LNG terminal and curtailment of losses in the rice business,” said a company statement Wednesday. The profit-after-tax grew from Rs 2,684 million in 1H14 to Rs 8,005 million in 1H15, posting an increase of three times over the same period last year.
For the petrochemicals business the year started with high PVC-Ethylene delta resulting in healthy margins for the company in 1Q’15 but it sharply fell during the second quarter on account of international price volatility. The business posted revenues of Rs 12.4 billion in 1H’15 versus Rs 11.9 billion in the same period last year. However, despite higher sales volume, the company posted a loss-after-tax of Rs 433 million versus profit-after-tax of Rs 123 million for the same period last year.
The fertilisers business urea production for 1H’15 stood at 950-KT as compared to 847-KT in the comparative period last year, ie an increase of 12 percent, mainly due to continuous two plant operation, lower outage days and better gas supply. Consequently, the Fertilizer business clocked in consolidated revenues of Rs 38.3 billion in 1H’15 as compared to Rs 27.7 billion. The increase represents higher sales volumes due to higher production as well as revenues generated from trading business which is now in-house.
The net consolidated profit-after-tax for the period stood at Rs 6,855 million as compared to Rs 3,375 million for the same period last year.
The foods business showcased a stellar turnaround and attained a revenue growth of 24 percent mainly on back of strong performance in the dairy segment spurred by favourable commodity prices and effective pricing strategy. Revenue for the period was Rs 24.9 billion versus Rs 20.1 billion in the same period last year, while the overall profit-after-tax (PAT) stood at Rs 1,977 million versus Rs 329 million in the same period last year. The increase in PAT was largely due to higher volumes and cheaper milk procurement, fuel and energy costs.
On the energy front, during 1H’15 Engro Powergen Qadirpur Limited completed its turnaround activity (due every six years) utilizing 33 days of scheduled outage in April/May. At half-year, overdue receivables from PEPCO stood at Rs 1,673 million versus Rs 1,210 million at the last year-end. The overdue payables to SNGPL at half-year were Rs 250 million versus Rs 232 million at year-end. EPQL earned a PAT of Rs 951 million in 1H’15 versus Rs 1,088 million in the same period last year.
In 2014, Engro embarked on the journey to build Pakistan’s first LNG storage and Re-gasification Terminal. The project was constructed ahead of time in a record period of 300 days and commissioned on March 29 this year-ranking it amongst the fastest built terminals in the world. As of June 30, 2015, the terminal has handled five cargo shipments by FSRU shuttling to Qatar. The LNG handled during the period was 324,620MT.
On the Thar Coal project front, mining activities of Sindh Engro Coal Mining Company (SECMC) remained on track as per schedule whereas on the coal power project, the company made headway on various fronts.
During the first half, generation licence has been issued and the upfront tariff has been notified. Moreover, the company has entered into Power Purchase Agreement with National Transmission and Dispatch Company, Implementation Agreement and Supplemental to the Implementation Agreement with PPIB on behalf of Government of Pakistan and also signed Coal Supply Agreement with SECMC whereby SECMC, on commencement of commercial production of its Thar mining project, would supply 3.8 million tons per annum of coal to the company.
EngroVopak Terminal Limited (EVTL) also continued to showcase strong performance with increase in top and bottom line mainly due to positive tariff impact of LPG import as SSGC’s terminal remained closed for a few months on account of operational issues -resultantly, all LPG imported to the country during that period was handled by EVTL.