EPCL's earnings erosion deepens

July 31, 2025 (MLN): Engro Polymer and Chemicals Limited (PSX: EPCL) has reported a deepening financial strain for the half-year ended June 30, 2025, as its consolidated loss for the period more than doubled YoY, rising by 103% to Rs3.23 billion from Rs1.59bn in the same period of 2024.

Despite a 9.38% increase in net revenue, reaching Rs37.61bn, the company faced intensified cost pressures and operational challenges that weighed heavily on profitability.

Cost of sales rose by 13.42% to Rs36.16bn, significantly outpacing revenue growth and resulting in a 42.04% drop in gross profit, which shrank to Rs1.45bn compared to Rs2.50 bn a year earlier.

This erosion in margins was further compounded by escalating other expenses, which surged by a staggering 644.42% to Rs398.07 million, as well as a decline in other income, which fell by 27.60% to Rs 213.60m.

Operating results plunged into the red, with the company posting an operating loss of Rs225.38m, a reversal from an operating profit of Rs1.19bn in the prior year, reflecting a deterioration of 118.88%.

While finance costs decreased by 21.11% YoY to Rs 2.99bn, they remained a heavy drag on overall profitability, contributing to a 23.78% rise in loss before tax adjustments, which totaled Rs3.22bn.

Tax dynamics offered little relief, as the company registered a loss before income tax of Rs3.18bn, up 20.26% from the previous year.

Income tax adjustments flipped from a benefit of Rs1.05bn last year to an expense of Rs 52.95m in the current period, compounding the downturn.

Final tax showed a contrasting swing of 207.64%, with the company reporting a credit of Rs45.09m versus a debit of Rs41.89m last year.

Basic and diluted loss per share both widened sharply by 80.20%, standing at Rs3.55, compared to Rs1.97 in 2024.

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