Engro Corp full-year profit jumps 30pc on fertiliser, chemical business

By Our Correspondent
February 22, 2020

KARACHI: Engro Corporation Limited on Friday said its profit for the full-year 2019 jumped 30 percent to Rs16.532 billion on strong fertiliser and chemical business earnings.

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Earnings per share remained at Rs28.69 as compared to an EPS of Rs22.06 last year. Engro also announced final dividend of Rs1/share, equivalent to 10 percent, in addition to interim dividend of Rs23/share (230 percent) it announced earlier.

On the fertiliser business front, Engro Fertilizers Limited posted a 23 percent year-on-year growth in profitability to Rs6.361 billion during 4QCY19 amid 28 percent year-on-year growth in urea off-take tagged with 18 percent year-on-year higher urea prices during the period.

Profitability of Engro Polymer & Chemicals Limited (EPCL) clocked in at Rs882 million, down 17 percent year-on-year, given lower gross margins owing to higher gas prices tagged with a one-off insurance claim during 4QCY18.

Additionally, FrieslandCampina Engro Pakistan Limited posted a loss after tax of Rs146 million

(LPS: Rs0.19) in 4QCY19 as compared to a LAT of Rs449 million (LPS: Rs0.59) during the same period last year primarily due to recovery in gross margins (13 percent in 4QCY19 vs 9 percent in 4QCY18).

“We do highlight that the company posted higher than expected other expenses at Rs4.8 billion in 4QCY20 (Rs8.5 billion in CY19) since it booked an impairment loss of Rs1.2 billion on its investment in FrieslandCampina Engro Pakistan Limited,” brokerage Arif Habib Limited said in a note.

Fauji Cement half-year profit plunges 73pc

Fauji Cement Company Limited posted a massive 73 percent fall in its half-yearly profit, which came down to Rs482 million (EPS: Rs0.35) from Rs1.32 billion (EPS: Rs1.32) in the same period last year, mainly owing to pricing pressures and surging costs.

The company in its financial results statement, sent to the apex bourse, did not declare any interim cash dividend.

Arif Habib Limited in its analysis said the FCCL’s topline witnessed an uptick of 4 percent year-on-year to Rs5.3 billion during 2QFY20 led by a 20 percent jump in dispatches to 925,000 tons, which offset the impact of lower retention prices.

Whereas in 1HFY20, the topline had depicted a decline of 8 percent year-on-year given the lower retention prices, which offset the impact of a 7 percent growth in dispatches (1.6 million vs 1.5 million tons), the brokerage added.

It said the gross margins of the company retracted by a massive 25ppts in 2QFY20 to 7.4 percent (2QFY19: 32 percent) amid rupee depreciation, lower retention prices, and higher electricity tariff per KwH (kilo-watt-hour).

Taurus Securities said the company witnessed topline growth of 25 percent on a quarter-on-quarter basis due to rise in overall dispatches by 29 percent, majorly contributed by 32 percent surge in local dispatches.

The company was successful in dispatching more despite increased competition and declining retail prices due to price wars, the brokerage said.

“However, the cement-maker performed poorly in terms of its cost structure as it witnessed a 35 percent escalation in COGS (cost of goods sold).:

During the quarter, the company booked a tax credit of Rs36 million vs effective taxation of 29 percent in 2QFY19.

Kot Addu Power’s 1H profit surges 86pc

Kot Addu Power Company Limited said its profit for the first six months of the current fiscal year jumped 86 percent to Rs11.727 billion (EPS: Rs13.32), compared to Rs6.321 billion (EPS: Rs7.18) posted in the first half of FY2018-19.

Arif Habib Limited said during 2QFY20, the power company’s sales witnessed a decrease of 28 percent year-on-year owing to lower dispatches.

“The load factor of the plant remained very low due to availability of relatively cheaper sources of power generation (coal and hydroelectric),” the brokerage added.

The brokerage report highlighted the power producer’s gross margins increased to 53.6 percent during 2QFY20 mainly on account of lower dispatches and 26 percent year-on-year higher dollar indexation.

Company’s other income surged 75 percent year-on-year to Rs6.969 billion due to tariff true-up along with higher interest rates compared to same period last year.

The finance cost also increased 7 percent year-on-year to Rs2.466 billion due to 5 percent year-on-year higher short-term borrowings (Rs54.5 billion as of September 2019).

“Due to surprise earnings for 2QFY20, we revise our earnings estimates by Rs4.8/share to Rs22.41/share for FY20,” Arif Habib analysts said.

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