Karachi August 18 2023: Engro Corporation reported a profit of PKR 21.5 billion during the first half of 2023, marking a 28% increase compared to the PKR 16.8 billion recorded in the first half of 2022.
On a consolidated basis, Engro Corporation’s revenue grew by 14% to PKR 202.5 billion in H1 2023 from PKR 177.5 billion in H1 2022. The Company posted a PAT of PKR 21.5 billion in H1 2023, which is 28% higher than PKR 16.8 billion in H1 2022. The PAT attributable to the shareholders is PKR 10.6 billion, translating into an EPS of PKR 19.12 per share (H1 2022: PKR 12.87 per share). Major variance is primarily attributable to higher earnings from dollar denominated businesses, one-off tariff true-up adjustment last year and higher costs incurred on research & business development last year, which have been partially offset by reversal of commodity cycle.
Engro Corporation’s standalone revenue during the review period H1 2023 was PKR 12.2 billion, a decline of 27%, primarily due to lower dividends received from Engro Polymer & Chemicals and Engro Fertilizers as a result of imposition of additional super tax on both businesses and reversal of commodity cycle in the Polymer business. Subsequently, the Company posted a 24% decline in PAT of PKR 9.5 billion in H1 2023 against PKR 12.5 billion in H1 2022, translating into an EPS of PKR 17.09 per share (H1 2022: PKR 21.66 per share).
Engro Corporation announced an interim cash dividend of PKR 2.0/- per share for the second quarter ended June 2023. This is in addition to the PKR 40.0/- per share dividend that has already been announced during the period, bringing the cumulative payout to PKR 42.0/- per share.
Portfolio Performance Review
Fertilizers: Urea sales stood at 1,034 KT versus 1,098 KT, translating to a market share of 33% for the period. Phosphate sales stood at 109 KT versus 154 KT during the same period in 2022. EFERT contributed ~USD 346.4 million in import substitution for Pakistan and sold urea at a discount of ~41% compared to international prices during the review period.
EFERT posted a PAT of PKR 5.5 billion in H1 2023 versus PKR 5.4 billion in H1 2022.
Petrochemicals: The business realized domestic sales of 92 KT, translating to a market share of 91% versus 121 KT in the same period last year. As a result, the business has enabled import substitution of USD 45.2 million. Post serving the local PVC demand, the business export sales stood at 21 KT, including caustic soda exports of 12 KT that generated foreign exchange of USD 12.1 million during the review period.
EPCL reported a PAT of PKR 2.7 billion in H1 2023 against PKR 7.1 billion in H1 2022, mainly attributable to commodity cycle reversal and lower margins on exports.
Telecommunication Infrastructure: Expansion continued for the telecommunication infrastructure vertical with Engro Enfrashare growing its national tower footprint from 2,937 sites H1 2022 to 3,644 sites, thus, servicing all of Pakistan’s mobile network providers. This led to a substantial revenue growth of Engro Enfrashare by 83% in H1 2023 in comparison to the same period last year.
The growth potential in the business is further demonstrated by the colocation opportunities witnessed during H1, with total colocation tenants of 88 in June 2023 representing a market share of 74%. The business also captured a market share of 60% in its Built-to-Suit (B2S) towers rollout during the period.
Foods & Rice: FrieslandCampina Engro Pakistan demonstrated a topline growth of 53%, reporting a revenue of PKR 47.0 billion against PKR 30.8 billion in the same period last year, due to volumetric growth driven by the expansion of its distribution network. The business recorded a PAT growth of 41% to PKR 1.3 billion in H1 2023 versus PKR 0.9 billion for the comparative period. The Company led various strategic initiatives across its portfolio focusing on volumetric growth, cost optimization and pricing, leading to higher profitability.
Engro Eximp Agriproducts recorded 5.4 KT basmati rice exports during H1 2023 versus 25.6 KT in H1 2022 due to lower than anticipated procurement during the harvest season. Consequently, the rice business generated revenue of USD 7.4 million through export versus USD 21.0 million in H1 2022.
Energy & Power: Mining operations continued smoothly, supplying coal to Engro Powergen Thar, Thar Energy and ThalNova Power, respectively. To meet the potential increment in demand, the Management has committed to initiate Phase III of its expansion strategy to further enhance the Mine capacity to 11.4 million tons per annum.
Engro Powergen Thar Limited achieved a collection of 91% from inception to date, bringing the Company at par with other Coal IPPs. During the first half, the Plant achieved an uptime of 74%, dispatching 1,464 GWH to the national grid, compared to 1,504 GWH in the same period last year. Plant uptime remained lower primarily due to an extensive planned maintenance and inspection activity, which typically occurs once every five years and is necessary to ensure its safety, reliability, and efficiency.
During the period, the EPQL Plant dispatched a Net Electrical Output of 496 GWH to the national grid compared to 331 GWH in the same period last year, as the Plant operations were temporarily suspended for a scheduled major inspection. The business posted a PAT of PKR 1.2 billion for the current period as compared to PKR 0.4 billion in the same period last year, due to higher capacity payments on the back of higher period weighing factor and efficiencies on higher dispatch.
Terminals: Engro Elengy Terminal enabled ~15% of the total gas supply to Pakistan. It handled 37 cargoes, delivering 110 bcf re-gasified LNG into the SSGC network. Engro Vopak Terminal handled 451 KT against 720 KT during the same period last year. The decrease is mainly attributable to chemical volumes due to slowdown in economic activity pertaining to restriction in imports.
