KARACHI: Pakistan’s premier conglomerate, Engro Corporation announced its financial results for the first half of the year ending June 30, 2022. Engro Corporation’s standalone revenue increased from Rs 8.6 billion in the first half of 2021 to Rs 16.6 billion in the first half of 2022, exhibiting a substantial growth of 92 percent.
Higher revenue was primarily due to higher dividends received from Engro Polymer and Chemicals Limited (EPCL) and Engro Fertilizers Limited (EFERT) which, in turn, were driven by strong underlying business performance. Resultantly, the Company achieved a 29 percent higher profit after tax (PAT) of Rs 12.5 billion in the first half of 2022 against Rs 9.7 billion in first half of 2021, translating into earnings per share (EPS) of Rs 21.66 per share (2021: Rs 16.81 per share).
On a consolidated basis, Engro Corporation’s revenue grew by 27 percent to Rs 177.5 billion in the first half of 2022 from Rs 139.3 billion in 1H 2021. The Company posted a PAT of Rs 16.8 billion in the first half of 2022, which is 42 percent lower than Rs 29.1 billion in the first of half 2021.
The PAT attributable to the shareholders is Rs 7.4 billion, translating into an EPS of Rs 12.87 per share (1H 2021: Rs 29.60 per share). Despite organic revenue growth, imposition of super tax on current and prior year earnings weighed on the conglomerate’s consolidated profitability.
Engro Corporation announced an interim cash dividend of Rs 11/- per share for the year. This is in addition to the Rs 12/- per share dividend that has already been announced during the year, bringing the cumulative payout to Rs 23/- per share.
Portfolio Performance Review:
Fertilizers: The domestic urea market exhibited growth of 12 percent in the first half of 2022. EFERT sales remained steady during the year touching 1,098,000 ton versus 1,167,000 ton during same period last year. By enabling indigenous production of urea, EFERT contributed $0.8 billion in import substitution for Pakistan, and sold urea at a discount of 78 percent over international prices.
Profitability of the business was impacted by super tax imposition to the tune of Rs 5.2 billion. EFERT posted a PAT of Rs 5.4 billion in the first half of 2022 against Rs 10.5 billion in the first half of 2021.
Petrochemicals: The petrochemical business continued its upward momentum and EPCL sales increased to 120,000 ton in the first half of 2022 against 96,000 ton in the first half of 2021. Timely expansion and operational reliability supported Pakistan in avoiding $72 million incremental outflow in the form of import substitution.
EPCL recorded sales of Rs 45.4 billion in first half of 2022 compared to Rs 30.5 billion in 1H 2021. The 49 percent increase is attributable to higher international pricing and capacity enhancement on the PVC front. EPCL reported a PAT of Rs 7.1 billion in the first half of 2022 against Rs 7.3 billion in 1H 2021, despite the super tax impact of Rs 2 billion.
Telecommunication Infrastructure: Expansion continued for the telecommunication infrastructure vertical at Engro, with Engro Enfrashare growing its national tower-print to 2,937 sites by the end of the first half, servicing all of Pakistan’s mobile network providers. This drove revenue growth of Engro Enfra share by 86 percent in first half of 2022 in comparison to the same period last year.
Engro Enfrashare is well-positioned to enable the colocation model while enhancing services to all its customers, as reflected in the 179 percent hike in colocation tenants versus last year. Engro Enfrashare is on track to capture future sectoral growth with its high value-add proposition complemented by economies of scale.
Foods & Rice: Engro Eximp Agriproducts continued its excellence in the rice export business, recording 62 percent growth in volumes versus the same period last year (33.4 KT versus 20.7 KT).
During the half year, the rice business generated a revenue of $21 million through exports versus $12 million in first half 2021, represented by the export of 25.6 KT in first half 2022 versus 14.1 KT in the comparative period. The business continued expanding its footprint in the local market and increased domestic volumes by 20 percent to 7.8 KT against 6.5 KT in the same period last year.
The results of FrieslandCampina Engro Pakistan Ltd are yet to be announced.
Energy & Power: Mining operations continued smoothly and the Mine supplied 1.4 million tons of coal to Engro Powergen Thar during the period. Phase II expansion of the Mine to 7.6 million tons per annum is on track and expected to be completed during fourth quarter of 2022.
Engro Powergen Thar Limited achieved a collection of 88% from inception to date, bringing it at par with other coal IPPs. During the first half, the Plant achieved 58% availability, dispatching 1,503 GwH to the national grid. Plant availability remained low due to outage following an incident on the coal conveyor belt. After detailed inspection and necessary rehabilitation work, both units of the plant successfully came online and have been demonstrating ~100% operational rate.
Due to a shutdown for scheduled major inspection, the EPQL Plant dispatched a Net Electrical Output of 331 GwH to the national grid against 394 GwH in the same period last year. The business posted a PAT of PKR 406mn for the current period as compared to Rs 905 million for the first half of 2022, primarily on account of lower Period Weighting Factor (PWF) applicable during the period and lower finance income; the impact of PWF will be offset in the next six months.
Terminals: Engro Elengy Terminal enabled 13 percent of the total gas supply to Pakistan. It handled 37 cargoes, delivering 110bcf re-gasified LNG into the SSGC network. Engro Vopak Terminal had an actual throughput of 720 KT against 638 KT during the same period last year. The increase was primarily observed in chemical volumes offset by lower LPG handling.
Copyright Business Recorder, 2022