EPCL's 1QCY23 profits hit hard by economic slowdown, plummeting by 75% YoY

April 18, 2023 (MLN): Engro Polymer and Chemicals Ltd (EPCL) has unveiled its 1QCY23 results wherein it posted net profits of Rs1.18 billion (EPS Rs1.3), depicting a plunge of around 75% YoY when compared to Rs4.7bn (EPS Rs5.19) in 1QCY22.

This drop in profitability is mainly attributable to the economic slowdown along with a decrease in the prices of PVC.

In conjunction with financial results, the company announced an interim cash dividend of Re1 per share i.e, 10% for ordinary shareholders, while the preference shareholders will be paid 50 paisa per share i.e, 5%.

The company’s net revenue slashed by 22.26%YoY to Rs17.97bn owing to the decrease in the prices of PVC along with the overall slowdown of the economy.

As a result, gross margins have been squeezed to 19.97% compared to 33.14% in 1QCY22.

It is important to mention that the company is facing trouble in getting its LC to retire even of raw materials as the shortage of USD persists thus management is trying to increase export of both caustic soda and PVC to bring in export proceeds used for importing material, a report by Darson Securities noted.

With lower demand of PVC and costlier gas, management undertook the maintenance turnaround in January and resumed production in February on RLNG. At the quarter end, EPCL holds 8k tons of PVC inventory, it added.

On the expense front, the distribution and marketing expenses dropped by around 3% YoY, whereas the administrative cost inched up by 19.5% YoY.

Meanwhile, the finance cost inflated by 91.8% YoY to clock in at Rs1.17bn on the back of monetary policy tightening.

On the other hand, the company’s other income witnessed a meager drop of around 3% YoY to stand at Rs444mn.

Meanwhile, the effective tax rate for the said period increased to 29.22% against 24.65% in 1QCY22.

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