EPCL faces profit decline as sales, margins fall

February 14, 2025 (MLN): Engro Polymer & Chemical Limited (PSX: EPCL) reported a consolidated profit after tax (PAT) of Rs2.1 billion (EPS: Rs0.4) for 4QCY24, down from Rs4bn (EPS: Rs4.39) in the same period last year.

The decline in profitability, driven by lower volumetric sales, reduced PVC-ethylene margins, and higher gas prices, was discussed during the company’s Analyst Briefing.

Despite the drop in earnings, the company recorded an improvement in gross margins for 4QCY24, attributed to a reassessment of the useful life and residual value of assets, which resulted in lower depreciation expenses.

Gas availability at competitive rates remains a key challenge for EPCL, as company stated.

The company is actively exploring alternatives but has yet to finalize a solution.

Effective February 2025, captive gas prices have risen to Rs3,500/mmbtu, with an additional levy of 5% applicable until June 2025 and 10% from July 2025 onward.

International PVC prices stood at $800/ton in December 2024 and are expected to remain rangebound due to oversupply and weak demand.

However, a significant decline is unlikely due to lower producer margins.

Ethylene prices are also expected to stay rangebound, as the company noted.

PVC volumetric sales for 4QCY24 reached 60kt, marking a around 15% YoY increase from 52kt in the same period last year.

However, total sales for CY24 stood at 212kt, slightly lower than the 221kt recorded in CY23.

The core delta for 4QCY24 ranged between $320-$330/ton and is expected to remain under pressure due to persistent oversupply and subdued demand in the region.

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