Engro Corporation announces impressive turnaround

On Thursday, Engro Corporation announced a spectacular turnaround in fortunes as the company reported a profit of Rs 3.83 billion in the first half of 2013, compared to a loss of Rs 340 million in the corresponding half of 2012, attributable to a rebound in its fertilizer and polymer divisions. According to a notice sent to the Karachi Stock Exchange, consolidated revenues of the company clocked in at Rs 66.9 billion, up 25% over the corresponding half of 2012. The result announcement was not accompanied by any payouts. Fertilizer division Engro’s fertilizer business reported highest-ever six-month revenue of Rs 20.5 billion during the period. It also recorded a highest-ever six-month urea sales volume of 622,000 tons during the half, attributable to increased production on the back of continued operation of its billion-dollar Enven plant on the Mari gas network as well as lower imports and higher off-takes in anticipation of the general sales tax (GST) and gas price hikes. The growth in sales is 57% higher than corresponding first half’s volume of 397,000 tons. The company received rota gas from the Sui Northern Gas Pipelines (SNGPL) for 28 days during the second quarter. Subsequently, Engro’s market share in the urea market increased to 23% in first half of 2013 from 14% in the same period last year. Foods division During the first half of 2013, revenue of Engro Foods fell 4.3%, driven by a slowdown in consumer demand and due to distribution issues in certain cities, electoral process in the country, deteriorating law and order situation and severe power crisis, said a press statement of the company with the results. Despite lower revenues, profit was 9% higher than the same period of last year. Engro Foods is in the process of revamping its distribution structure to support the growth trajectory going forward. The ice cream business recorded revenue of Rs 1.4 billion, a decrease of Rs 114 million as compared to the same period last year. Polymer division Engro Polymer and Chemicals recorded a growth of 27% in revenues during the period, mainly attributable to higher prices and higher vinyl chloride monomer (VCM) exports. Higher sales along with good margins led to a profit of Rs 425 million compared to Rs 59 million in first half of 2012. Production operations remained smooth throughout the period with VCM production showing a 25% growth over the same period of last year. Most of the VCM was consumed in-house, while surplus production of about 10,000 tons was exported. Energy division In first half of 2013, the Qadirpur power plant dispatched a total net electrical output of 796 gigawatt hours (GwH) with a lower load factor. Sindh Engro Coal Mining Company (SECMC) set up a wholly-owned subsidiary, Thar Power Company. It signed agreements with KESC for supplying 600MW.