EPCL sees 3% drop in first-half profit on imposition of super tax

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August 11, 2022 (MLN): Engro Polymer & Chemicals Limited (EPCL) has reported a net income of Rs7.05 billion for the first half year ended June 30, 2022, down by merely 3% YoY when compared to Rs7.27bn recorded in the same period last calendar year, mainly on the back of imposition of super tax.

This translates into basic earnings per share of Rs7.55 during the review period as compared to Rs7.89 in the same period last year (SPLY).

In conjunction with financial results, the Board of Directors has recommended the interim cash dividend for ordinary shareholders for the second quarter ended June 30, 2022, Rs2.5 per share i.e. 25%. In addition, it also recommended an interim cash dividend for preference shareholders for the second quarter ended June 30, 2022 Rs. 0.37 per share i.e. 3.7%.

During the period under review, net sales revenue grew by around 49% YoY to Rs45bn due to higher volumetric sales along with PKR depreciation. However, PVC-ethylene margins declined as ethylene prices rose amid higher crude oil prices that increased the cost of sales by 59% YoY. Accordingly, the gross margins shrank from 38% to 33% in 1HCY22.

The overall expenses of the company increased: distribution and marketing expenses by 69% YoY, administrative costs by 50% YoY and other expenses by 3x YoY during 1HCY22.

On the other hand, the other income surged by around 43% YoY to peg at Rs852mn, attributable to higher cash and cash equivalent and higher profit rates, providing a cushion to the bottom line.

Meanwhile, the finance cost ballooned by 48% YoY owing to interest rate hikes and higher short-term borrowing that affected the financial health of the company.

Notably, the effective tax rate increased to 40% as compared to 27% in 1HCY21.

Consolidated Profit and Loss Account for the half-year ended June 30, 2022 ('000 Rupees)

 

Jun-22

Jun-21

% Change

Net revenue

 45,403,932

 30,496,098

48.88%

Cost of sales

 (30,211,823)

 (19,042,334)

58.66%

Gross profit

 15,192,109

 11,453,764

32.64%

Distribution and marketing expenses

 (284,827)

 (168,540)

69.00%

Administrative expenses

 (503,870)

 (336,458)

49.76%

Other expenses

 (2,127,859)

 (711,116)

199.23%

Other income

 851,929

 597,661

42.54%

Operating profit

 13,127,482

 10,835,311

21.15%

Finance costs

 (1,350,685)

 (914,546)

47.69%

Profit for the period before taxation

 11,776,797

 9,920,765

18.71%

Taxation

 (4,725,040)

 (2,655,421)

77.94%

Profit for the period after taxation

 7,051,757

 7,265,344

-2.94%

Earnings per share – basic (Rupees)

 7.55

 7.89

-4.31%

Earnings per share-diluted (Rupees)

5.83

6.01

-3.00%

 

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Posted on:2022-08-11T10:29:19+05:00

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