ISLAMABAD (Sarzameen News)- Pakistan’s premier conglomerate, Engro Corporation (PSX: ENGRO) announced its financial results yesterday for the year 2017 at a meeting held at its headquarters in Karachi.
The company posted a consolidated profit-after-tax of PKR 16,290 million compared to PKR 12,912 million (excluding one-off capital gain on Engro Foods disposal). The underlying businesses performed strongly in 2017.Overall, profit was lower due to divestments during 2016 against which capital gain was booked in the same year.
Engro Corporation concluded the year 2017 with a revenue of PKR 128,593 million vs. PKR 113,421 million in 2016 depicting an increase of 14% (excluding Engro Foods’ turnover of the previous year) with major contribution from fertilizers and petrochemicals businesses. Despite partial divestment of fertilizers and foods businesses during 2016 and adverse taxation impacts arising from Super Tax and tax on inter-corporate dividends, the earnings per share from continuing operations clocked at PKR 17.96 compared to PKR 16.69 for 2016.
On a standalone basis, earnings per share were PKR 21.76 with total dividends of PKR 21 per share for the year 2017, depicting a dividend payout of 96.5%.
Engro Fertilizers’ profits grew over 20% during last year mainly due to an increase in the demand for urea in the domestic market and exports amounting to 1,739 KT and 223 KT respectively. These profits were further leveraged by the regularization of gas prices for Plant 1 post allocation. The business continued to operate both its plants due to uninterrupted gas supply.
Polymer business profitability tripled as compared to last year. Since the business had diversified its supplier base, it was able to procure ethylene from the international market and continue to run smooth plant operations. Reliable plant operations along with efficiency ratios supported the bottom line and shareholder value.
Within Engro’s energy assets, the Qadirpur plant performed well as per our expectations. The circular debt continues to rear its head persistently creating problems in the domestic energy sector. The titan projects of Thar power generation and coal mining are steadily making progress ahead of their schedules and are expected to be completed by the middle of 2019.
Elengy Terminal handled 70 cargoes during the year as compared to 44 cargoes during the last year. The availability factor remained at 97.64% for the year. The business successfully executed an Amendment Agreement to the LNG Operations and Services Agreement with Sui Southern Gas Company Ltd (SSGCL) during the year for the increased quantity of gas amounting to 200 MMSCFD which SSGCL had started utilizing from January 2017.
Engro VopakTerminal recorded a modest volumetric increase of 5% for chemicals and LPG handled over last year, which is mainly attributable to higher imports. During the year, the terminal successfully installed phosphoric acid pipeline that has resulted in an improved and more efficiently managed jetty occupancy.
Engro Foods’ profitability decreased from last year owing to continuous decline in the Specialized Tea Creamer category due to the cost pressures following the tax legislative changes announced in the previous year, followed by price increases placing the business at a disadvantage to loose milk. Further, competition has also been intensifying in the recent past with the entry of multiple players on the back of discounting, especially in rural areas.
Improved credit metrics have resulted in Engro Corporation’s long-term rating being maintained at AA and short-term rating at A1+.
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