Engro Corporation announces financial results for first quarter for the quarter ended March 31st, 2020

Engro Corporation announces financial results for first quarter for the quarter ended March 31st, 2020

KARACHI: Pakistan’s premier conglomerate, Engro Corporation (PSX: ENGRO) announced its financial results for the quarter ended March 31st, 2020.

On March 11, 2020, the World Health Organisation (WHO) declared Covid-19 a pandemic. The management has responded well during this time of crisis and has taken necessary steps to ensure long term sustainability of cash flows. In addition, a central Covid-19 Crisis Management Committee has been constituted which actively monitors and manages the developing situation across all our businesses with regards to the pandemic.

The Covid-19 pandemic and resulting measures taken by governments locally and globally to contain the virus have also affected Engro businesses in various ways including supply chain issues, force majeure declaration by EPC contractors, closure of the petrochemical plant due to lockdown and potential liquidity constraints resulting from the economic slowdown.

In these challenging times, Engro remains committed to help solving pressing issues of our time, improve lives of the people of Pakistan and have a positive impact on the society we operate in. In order to fight Covid-19 and its negative impacts on Pakistan, Engro, Dawood Hercules and the Group Chairman along with his family have pledged a contribution of PKR 1 billion. This amount will be spent on disease prevention, protecting healthcare practitioners, enabling patient care and bolstering livelihood and sustenance of the most deserving in society.

On the business side, Engro’s consolidated revenue grew by 11 percent in comparison to the prior period, mainly driven by energy projects in Thar coming online during July 2019 and offset by lower turnover of Fertilisers and Petrochemicals businesses. The Company posted a consolidated profit after tax (PAT) of Rs5,941 million compared to Rs6,565 million for the similar period last year. Profit attributable to the owners was recorded at Rs3,317 million compared to Rs4,010 million for the prior period.

On a standalone basis, the Company posted a PAT of Rs780 million against Rs3,832 million for the same period last year, translating into an EPS of Rs1.35 per share. This decrease is primarily attributed to delays in receipts of dividends from subsidiaries as their Annual General Meetings (AGMs) have been postponed on account of the Covid-19 lockdown. This is, therefore, a temporary timing difference between quarters and not reflective of underlying performance of the company.

The company announced an interim cash dividend of Rs6 per share for the first quarter. Like in the past, the board has endeavoured to maximise dividends on a quarterly basis, however, the future dividends for the year would be based upon prevailing situation and earnings for the year. The portfolio of Engro Corporation is resilient in these difficult times and the company remains confident that despite challenging circumstances, it will be able to maintain a healthy performance in upcoming quarters.

Volumetric sales for the fertiliser business were lower due to price disparity prevalent during the quarter, which was eliminated by the period-end. Revenue was lower by 54 percent as compared to same period last year. PAT for the period stood at Rs571 million against Rs4,007 million in the comparative period owing to lower offtake and increased finance cost due to higher policy rates and exchange loss on foreign currency borrowings. The fertiliser industry continues to face challenges in the recovery of long outstanding subsidy. The polymer business resumed operations on 20th April 2020 after a closure of approximately one month in compliance with the lockdown directives issued by the provincial government. Due to limited days of operations, production remained lower and resultantly, the business recorded a lower revenue of Rs7,058 million compared to Rs9,344 million in the same period last year and posted a PAT of Rs193 million compared to Rs1,094 million for the same period last year.