August 22, 2024 (MLN): Engro Corporation Limited (PSX: ENGRO) unveiled its profit and loss statement for Q2 FY24, wherein the profit after tax from continued operations clocked in at Rs2.22 billion [EPS: Rs6.45], up by over 50% compared to a profit of Rs1.48bn [EPS: Rs2.9] in Q2 FY23.
Considering the improved financial performance, the company's directors have announced an interim cash dividend for the six months ended June 30, 2024, a Rs8 per share.
This is in addition to the interim cash dividend already paid at Rs11 per share.
The profit and loss account of ENGRO shows that its company's top line decreased 0.7% YoY to Rs74.59bn as compared to Rs75.09bn in SPLY.
Regardless, the company reported higher profits due to a significant boost from other income, a notable reduction in expenses, and most importantly, a substantial decrease in tax expenses.
The cost of sales rose by 14.3% YoY and when merged with the effect of declining sales, the gross profit worsened by 38.6% YoY to Rs13.01bn in Q2 FY24.
Accordingly, the gross margins worsened to 17.4% as compared to 28.2% in SPLY.
On the expense side, the company's administrative expenses rose 41.3% YoY to Rs3.9bn. On the other hand, notable reduction was seen in selling and distribution expenses and other operating expenses.
During the period under review, other income expanded by 64.4% YoY to stand at Rs3.72bn in Q2 FY24 as compared to Rs2.26bn in Q2 FY23.
The company’s finance cost rose by 45.7% YoY and stood at Rs5.48bn as compared to Rs3.76bn in SPLY, mainly due to higher interest rates.
On the tax front, the company paid a lower tax worth Rs2.27bn against the Rs11.08bn paid in the corresponding period of last year, depicting a decrease of 79.5% YoY.
It is worth noting that, after including profit from discontinued operations, the company reported a profit of Rs 5.08 billion, marking a significant decline of 61.04% year-over-year.
Engro Energy Limited's divestment EPQL, EPTL and SECMC meets the classification criteria of International Financial Reporting Standard 5 — "Non-Current Assets Held for Sale and Discontinued Operations".
Accordingly, in the consolidated financial results of the Company for the six months ended June 30, 2024, the financial results of thermal energy assets have been reported as discontinued operations.
In January 2024, Ministry of Industries and Productio requested the fertilizer industry to procure higher cost imported urea and sell it at a lower price, similar to locally produced urea.
To recover the additional cost of imported urea, the fertilizer manufacturers increased the price of locally produced urea to the extent that additional cost is recovered in 12 months.
Although Engro Fertilizers sold its entire stock of imported urea during March quarter, the additional cost of imported urea was amortized on a pro-rata basis in the consolidated profit and loss of the Company and unamortized portion of Rs5.32 billion was retained in the consolidated balance sheet of the company as at March 31, 2024, to be amortized over the remaining period.
During review of six months consolidated financial statements of the company, the management reassessed the above treatment and in order to better reflect the transaction in accounting terms, the entire unamortized portion of Rs5.32bn (post tax impact of Rs3.02bn) has been charged in the consolidated profit or loss of the company for the period ended March 31, 2024.
Accordingly, this has an impact of Rs1.7bn on profit attributable to the owners of the holding company.
| Consolidated (un-audited) Financial Results for the quarter ended June 30, 2024 (Rupees in '000) | |||
|---|---|---|---|
| Jun 24 | Jun 23 | % Change | |
| Total Revenue | 74,588,917 | 75,087,559 | -0.66% |
| Cost of sales | (61,580,569) | (53,899,878) | 14.25% |
| Gross Profit/ (loss) | 13,008,348 | 21,187,681 | -38.60% |
| Administrative Expenses | (3,895,995) | (2,757,477) | 41.29% |
| Selling And Distribution Expenses | (1,371,727) | (1,948,149) | -29.59% |
| Other gains/losses | 177,508 | (71,896) | – |
| Share of income from joint venture and associates | 637,064 | 452,529 | 40.78% |
| Other Income | 3,722,229 | 2,264,858 | 64.35% |
| Other Operating Expenses | (1,324,142) | (1,758,555) | -24.70% |
| Finance Cost | (5,480,147) | (3,761,486) | 45.69% |
| Profit before income tax, minimum tax and final tax | 5,473,138 | 13,607,505 | -59.78% |
| Taxation | (2,274,930) | (11,079,636) | -79.47% |
| Profit from continuing operations | 2,222,991 | 1,479,830 | 50.22% |
| Basic earnings/ (loss) per share | 6.45 | 2.90 | – |
Amount in thousand except for EPS
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Posted on: 2024-08-22T10:33:22+05:00
