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ENGRO: Earnings on the rise as all businesses thrive

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August 24, 2021 (MLN): Engro Corporation Limited (ENGRO) has unveiled its financial performance for the half-year ended June 2021, as per which the company reported a remarkable 84% YoY increase in net profits to Rs29bn compared to Rs15.79bn earned in the corresponding period last year.

This translated into earnings per share of the company which went up by 88% YoY from Rs15.72/sh to Rs29.6/sh.

Along with the result, the company announced an interim cash dividend of Rs7.0/share, taking cumulative dividend during 1H2021 to Rs19.0/share which is lower than the industry expectations of Rs10.0-12.0/share, a report by Topline Securities cited.

The significant increase in ENGRO’s profitability during the quarter can be attributed to improvement in Fertilizer, Polymer, and Food businesses.

On the fertilizer business front, EFERT’s net profit (the largest contributor to ENGRO’s earnings) arrived at Rs10.5bn (EPS: Rs7.87), witnessing 2.35x YoY jump during 1HCY21 owed to a surge in urea and DAP prices, increased profitability from fertilizer trading business and higher other income due to the strong cash position of the company given advances from customers for DAP fertilizer.

Furthermore, the bottom-line of Engro Polymer & Chemicals Limited (EPCL) settled at Rs7.27bn (EPS: Rs7.99), a huge increase of 33x YoY attributable to an increase in PVC margins mainly led by disruption of supply and demand of PVC Resin.

On the Food business front, FrieslandCampina Engro Pakistan Limited (FCEPL)’s earnings were also up by 4.8xYoY to Rs1.4mn due to strong volumetric growth in all categories and improved gross margins.

However, Engro Powergen Qadirpur Limited (EPQL) posted a Profit after Tax of Rs905million (EPS: Rs2.79) in 1HCY21, which was 31% lower than the profits of Rs1.31billion during SPLY.

Thus, the improved performance of subsidiaries led to earnings accretion for ENGRO.

Overall, ENGRO recorded impressive revenue growth of 30% YoY to Rs139.3bn in 1HCY21, mainly on account of higher revenues from the Chemical and other businesses.  

The finance cost of the company declined by 29.4% YoY to Rs7.9bn as compared with Rs11.26bn in the corresponding period last year owing to lower short-term borrowing on the back of higher profitability and better working capital position of group companies.

Among other line items, Other Income and operating expenses decreased by 18.7% YoY and 12.9% YoY to Rs5.69bn and Rs3.17bn respectively, the share of income from associates jumped to Rs1.87bn, up by 64% YoY. The effective tax rate has increased to 23% as compared with 22% in 1HCY20 due to a one-off tax reversal booked last year.

Consolidated Financial Results for the Half year ended June 30th, 2021 (Rupees ‘000’)

 

Jun-21

Jun-20

% Change

Revenue

                  139,319,217

                  107,163,250

30.01%

Cost of Sales

                  (91,672,599)

                  (74,239,152)

23.48%

Gross Profit

                     47,646,618

                     32,924,098

44.72%

 Distribution and selling expenses

                     (3,463,622)

                     (3,175,544)

9.07%

Administrative expenses

                     (2,826,486)

                     (2,803,976)

0.80%

Other income

                       5,687,915

                       7,000,068

-18.74%

Other operating expenses

                     (3,176,306)

                     (3,648,148)

-12.93%

Reversal of expected credit loss on subsidy receivable from GoP

                           164,417

                                      –  

Finance cost

                     (7,948,920)

                  (11,265,029)

-29.44%

Share of income from JV and associates

                       1,877,288

                       1,143,096

64.23%

Profit before taxation

                     37,960,904

                     20,174,565

88.16%

Taxation

                     (8,849,887)

                     (4,379,619)

102.07%

Profit after taxation

                     29,111,017

                     15,794,946

84.31%

Earnings per share – basic and diluted (Rupees)

                               29.60

                               15.72

88.30%

 

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Posted on: 2021-08-24T12:15:00+05:00

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