Engro registers strong recovery, posts Rs 5,919 m profit

The Engro Corporation Limited here on Tuesday announced that it posted a profit of Rs 5,919 million for the nine months ended September 30, 2013. 

According to a statement issued here by Engro Corporation, it  continued its positive turnaround during the first nine months of 2013  with consolidated revenue increasing by 30% over the same period last year, to reach Rs. 107,764 million.

While net profit (attributable to the equity holders of the holding company) was Rs. 5,919 million as compared to a net loss of Rs. 433 million during the same period last year. 

The return to profitability is mainly attributable to the fertilizer business, as the company increased production and posted better results. 

The third quarter added Rs. 2,478 million to the bottom line as both fertilizer plants ran through most of the quarter, Engro Polymer’s revenues and profits grew substantially and other subsidiaries also had an improved performance except for the fall in revenues at Engro Foods.

The company’s fertilizer business’ - Engro Fertilizers - market share  in the urea industry increased to 25%  against 16% during the same period last year.

‘Market share within domestically-produced Urea market also improved to 30% compared to 22% during the same period last year. 

The sales of the company’s manufactured blended fertilizer, Zarkhez and E-NP, stood at 70 KT as against 45 KT during comparative period. The Company’s market share in Potash grew to 46% from last year’s 44%.

The company also registered a profit after tax of Rs. 3,234 million for nine months ended September 30, 2013  against a loss of Rs. 2,978 million in the corresponding period of last year. 

The company’s rice processing business - managed by Engro Eximp Agriproducts - sold 18 KT of finished rice in the international market and 29 KT in the local market in 2013. 

The EXIMP launched its own brand of BRymah” in the UAE and Pakistan to capture better value whilst also introducing the new concept of wholesaling rice in the domestic market via launch of “Bharosa outlets” in Karachi.

The EXIMP was able to reduce its loss after tax during the first nine months of 2013 to Rs442 million against a loss of Rs  693 million during the same period last year.

During the first nine months of 2013, the foods business - Engro Foods registered a decrease in revenue by 4.7%, driven by a general slowdown in consumer demand and due to distribution issues in certain cities.

The foods business’ market share in the UHT dairy segment was maintained at 50.5% as of August 2013, a volumetric decline of 12% as compared to 9M 2013 was a result of overall industry decline and operational issues. 

The ice cream business reported revenue of Rs. 2,266 million, a decrease of Rs. 170 million as compared to the same period last year. 

The Nara Farm registered a loss of Rs. 129 million as compared to a loss of Rs. 25 million in 2012 mainly due to a dip in the market value of animals in the first half of 2013 and inflation in animal feed cost.

Al-Safa Halal - a halal meat brand, with operations spread in Canada and North America - posted sales of Rs. 719  million (first 9 months of 2012: Rs. 810 million). 

The dip in sales was due to new entrants pushing shelf-space.  The Company reported a loss after tax of Rs. 110 million (first 9 months of 2012: Rs. 137 million). The loss is directly consolidated in Engro Corporation’s financial statements.

The Engro’s petrochemicals business - Engro Polymer & Chemicals - achieved revenue of Rs. 18,137 million during the nine months ended September 30, 2013 as compared to Rs. 15,553 million during comparable period last year. 

The profit after tax for the period was Rs. 552 million as compared to Rs.83 million in the same period last year. 

In the energy sphere the Company’s flagship business - Engro Powergen Qadirpur plant -successfully completed its most extensive and complex turnaround since commissioning three years ago. 

On the operations side, in the first 9M of 2013, the plant dispatched a total Net Electrical Output of  1,261GWh with a lower load factor than the same period last year due to the turnaround.
The Sindh Engro Coal Mining Company (SECMC) achieved progress on mining activities. 

Site mobilization, land demarcation and survey activities and updating of land ownership records, detailed CSR need assessment and revised project execution strategy with consultant were completed. 

During the period, SECMC also set up a wholly owned subsidiary, Thar Power Company Limited. 
A Coal Pricing Framework has also been developed with the help of a consultant to fast-track the development of the coal pricing mechanism.

The Company’s interest in chemical storage and handling - EngroVopak’s - revenues and profitability are lower versus last year due to revised tariffs on paraxylene and acetic acid. 

The company continues to perform well and is well placed to play a key role in LNG imports in order to alleviate the gas and power crisis facing the country.

Engro plans to continue playing an important role in helping the country overcome the energy crisis through its involvement with SECMC coal mining / power project and by participation in the LNG import project. 

The Company is also planning to list Engro Fertilizer through an Initial Public Offering (IPO) during fourth quarter of 2013.