KARACHI: Pakistan’s premier conglomerate, Engro Corporation (PSX: ENGRO) announced its financial results for the year ended December 31, 2020.
COVID-19 & Hussain Dawood Pledge:
The Covid-19 pandemic continues to be an unprecedented global challenge that is, to date, having devastating effects on public health, economies, and societies around the world. As vaccination programs roll-out globally, Pakistan is procuring Covid-19 vaccines from various manufacturers and planning to launch its Covid-19 vaccination drive in the first quarter of 2021.
Despite these challenging times, we remain committed to our Central Idea which guides us to improve lives of all Pakistanis and have a positive impact on the society. In order to tackle the pandemic’s negative impacts on Pakistan, Chairman Hussain Dawood, on behalf of Dawood Hercules Corporation, Engro Corporation, and his family, pledged a contribution in services, kind, and cash of PKR 1 billion for short/medium/and long-term recovery. To date, PKR 301 million have been donated via cash and kind with focus on disease prevention, protecting and enabling healthcare practitioners and frontline workers, enabling patient care and facilities and bolstering livelihoods and sustenance of the most deserving in society. We believe we must remain fully transparent while attempting to make an impact and work towards saving lives. Further details regarding the Pledge and its initiatives may be viewed at https://www.hussaindawoodpledge.com. Overview of Financial Performance:
On the business side, Engro’s consolidated revenue grew by 10 percent from PKR 225.76 billion during 2019 to PKR 248.81 billion primarily attributable to higher revenue from full-year operations of Thar energy projects.
The Company posted a consolidated Profit After Tax (PAT) of PKR 44.11 billion – up by 46 percent, while PAT attributable to the shareholders increased to PKR 25.10 billion from PKR 16.53 billion in 2019.
On a standalone basis, the Company posted a PAT of PKR 16.30 billion against PKR 14.30 billion for the comparative year, translating into an EPS of PKR 28.29 per share. Increase in standalone profitability is primarily on account of higher dividends from subsidiaries as well as full intercorporate tax relief on dividends in 2020 versus partial relief in 2019.
The Company announced a final cash dividend of PKR 2/- per share for the year. This is in addition to
PKR 24/- per share announced during the year, bringing cumulative payout to PKR 26/- per share.
Financial Performance – Segmental Perspective:
Fertilizers: Despite the unprecedented challenges faced in 2020, the Fertilizer business has achieved a historic milestone of highest ever urea production of 2,264 KT as compared to 2,003 KT produced in 2019. This increase of 13 percent is primarily due to better plant utilization supported by minimal outage days and higher gas availability. This was offset by lower DAP off-take and removal of GIDC leading to reduction in Urea prices. PAT for the year stood at PKR 18.13 billion showing a growth of 7 percent compared to 2019.
Petrochemicals: Revenue for the Polymer business decreased by 7 percent in comparison to 2019, mainly due to plant shutdown during the lockdown period in 1H 2020. The fall in volumes was offset by cost efficiencies and higher PVC prices which rallied throughout 2H 2020 on account of global supply constraints. This enabled the Company to record the highest ever profitability in its history clocking at PKR 5.73 billion, 55 percent higher vs last year.
Despite the challenges faced in 2020, Engro continued to build on its experience in the Petrochemicals vertical and made considerable progress on the feasibility study of a polypropylene facility based on a propane dehydrogenation plant.
Energy & Power: Energy & Related Mining and power plant operations at Thar continued smoothly, with approximately 3.8 million tons of coal supplied by the mine and a dispatch of 4,032 GwH to the national grid by the power plant during the period. Construction for expansion of mine, doubling its existing capacity is underway, with the contractor mobilized at site.
The Qadirpur Power Plant, which operates on permeate gas, is facing gas curtailment due to depletion of the Qadirpur gas field. To make up for this shortfall, the plant has been made available on mixed mode. During the period, the Plant dispatched a Net Electrical Output of 550 GwH to the national grid with a load factor of 29.5% compared to 58.8 percent last year.
In 2020, EPQL entered into an MOU with committee for negotiations with IPPs whereby EPQL and CPPA-G will enter into a binding agreement such that all the outstanding payments at 30th November 2020 would be made to the Company in two installments during 2021. Consequently, in the larger national interest, EPQL would reduce its ROE on the business.
Terminals: In the terminals business, Elengy Terminal handled 72 cargoes during the year, delivering 215.4 bcf re-gasified LNG into the SSGC network, equivalent to more than 12 percent of the country’s gas requirements. Meanwhile, Engro Vopak Terminal broke the record of handling 246 Kt LPG compared to the previous record of 240 Kt in 2017. On the other hand, EVTL also witnessed a volumetric decline in chemicals, attributable to reduction in chemical volumes on account of lower import of Phos Acid and Paraxylene due to COVID-19.—PR
Copyright Business Recorder, 2021
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