EPCL reaps massive profits on higher PVC prices

February 08, 2022 (MLN): Engro Polymer and Chemicals Ltd (EPCL) has unveiled its CY21 results wherein it posted net profits of Rs15.1billion (EPS Rs16.28), depicting an increase of 2.6x YoY when compared to Rs5.73bn (EPS Rs6.3) in CY20, mainly on the back of higher PVC prices coupled with higher volumetric sales.

In conjunction with financial results, the company announced a higher than expected final cash dividend of Rs5.5 per share for ordinary shareholders, which takes CY21 cash payout to Rs16.3 per share.

During CY21, the company’s net revenue grew by 98%YoY to Rs70bn due to higher international PVC prices (up 63%YoY) and better volumetric sales, as the company’s PVC production and sales took a hit due to petrochemical plant disruption amid COVID-19 lockdown during CY20. Also due to better-fixed cost absorption owing to higher volumes, the gross margins expanded to 34% from 31% during the said period.

On the expense front, the distribution and marketing expenses surged by 38% YoY, administrative cost by 24.3% YoY and other expenses by 2.77x YoY during CY21 due to exchange losses.

However, due to the lower interest rate environment, the finance cost dipped by 13% YoY to clock in at Rs1.90bn, providing some more strength to the bottom line.

The other positive highlight includes the other income that surged by 12.5% YoY to Rs1.33bn thanks to higher profitability and improved cash generation during the year, a research note by Sherman Securities highlighted.

Meanwhile, the effective tax rate for the said period improved to 24.6% against 30.4% in CY20.

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