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Engro Corporation’s profit doubles to Rs17.26 billion in 2015

By Salman Siddiqui
February 19, 2016

KARACHI: Engro Corporation’s net consolidated profit soared more than doubled to Rs17.26 billion in the year ended December 31, 2015 as the group’s earnings from its fertilisers and food operations sharply increased, analysts said on Thursday.

The conglomerate’s profit amounted to Rs7.80 billion in the previous year. Its earnings per share stood at Rs26.32 in 2015 as compared to Rs13.59 in 2014, the firm announced in a notice to the Pakistan Stock Exchange.

The group’s board recommended final cash dividend of Rs7/share for the shareholders whose name will appear in the register of members on April 8, 2016. This is in addition to interim dividend already paid at Rs11/share.

Tahir Abbas at Arif Habib Limited said Engro Fertilizer’s net earnings surged 83 percent to Rs15 billion in the year, translating into earnings per share of Rs11.28. The growth in the fertiliser business was recorded due to “availability of concessionary gas, and inclusion of DAP sales.”

The corporation's earning from its food business (Engro Foods) climbed to Rs3.2 billion (earnings per shares of Rs4.13) from Rs0.8 billion (earnings per share of Rs1.16). “This growth was on account of volumetric expansion leading to a higher market share in the dairy segment coupled with margin accretion,” Abbas said.

However, its chemical business (EPCL) managed to keep its losses in-check by posting consolidated loss-after-tax of Rs0.6 billion (loss per shares at Rs0.98), down 36 percent from Rs1.1 billion (loss per share of Rs1.53) last year, he said.

Fahad Rauf at Taurus Securities said the chemical business booked lower losses "due to subdued PVC-ethylene core delta, however the quantum of loss declined 36 percent due to reversal of certain provisions.” “Further, expected subdued performance of rice business coupled with a hefty Rs3.4 billion impairment charge put some brakes on the bottom-line growth," he added. "Positive contributions from EPQL, VOPAK and LNG business added to the profitability." 

Aijaz Siddique at KASB Securities said the company will benefit from continuation of gas to EFERT and expected rebound in the international prices of urea.   “Strong margins of the food business due to cheaper raw materials would also add to the valuation of the conglomerate,” Siddiqui said.

Muhammad Tahir Saeed at Topline Securities flagged interruptions in gas flows, change in urea and feed/fuel gas prices and unanticipated rise in international milk powder prices as key risks for ENGRO.

The notice said the corporation’s net sales surged to Rs184.26 billion from Rs175.95 billion last year.

The cost of sales dropped 7.36 percentage points to 72.05 percent (or Rs132.76 billion) of the sales from 79.41 percent (or Rs139.74 billion) last year.