Engro reports a 14% rise in revenue generation

ISLAMABAD, Feb 16 (By Muhammad Tashfin): Engro Corporation Limited (PSX: ENGRO) on Thursday said its ‘standalone revenue’ had increased from Rs.21 billion to Rs.24 billion in 2022 as compared to the last year, exhibiting a healthy growth of 14 percent.

In announcing its financial results for the year ended December 31, 2022, the company stated that “higher revenue was achieved primarily due to higher dividends received from Engro Polymer & Chemicals Limited (EPCL), Engro Fertilizers Limited (EFERT), and Engro Energy Limited (EEL), which, in turn, were driven by strong underlying business performance.

The company’s PAT increased by 11% from Rs.19 billion in 2021 to Rs.21 billion in 2022, yielding an EPS of Rs.36.79 per share (2021: Rs. 32.14 per share).

Consolidated, Engro Corporation’s revenue increased from Rs 312 billion in 2021 to Rs.356 billion in 2022, a 14% increase. The company posted a PAT of Rs.46 billion in 2022, which is 13% lower than Rs.53 billion in 2021 on account of a Super Tax charge of 4% on retrospective and current year earnings and a one-off adjustment of Engro Powergen Thar Limited (EPTL) tariff true-up adjustment.

The PAT attributable to the shareholders decreased to Rs.24 billion from Rs.28 billion in 2022, translating to an EPS of Rs.42.23 per share (2021: Rs.48.50 per share).

Engro Corporation announced a final cash dividend of Rs.1/- per share for the year. “This is in addition to the Rs.33/- per share dividend announced during the year, bringing the cumulative payout to PKR 34/- per share.”

According to the corporation, the recent catastrophic floods in the nation and the global economic slump both had negative effects on the domestic fertilizer market. Due to a 60-day LTR (Long Term Turnaround), which was the longest LTR in the previous 50 years, urea sales fell to 1,936 KT from 2,295 KT in 2021.

This was completed without any unanticipated outages and with a “ZERO” TRIR (Total Recordable Injury Rate). According to the statement, the facility’s performance is anticipated to improve with a decrease in the energy index and an increase in capacity of about 170KT annually following the completion of this successful LTR.

In response to a downturn in global demand and a turn in the commodity cycle, international DAP prices dropped to USD 730 a tonne. The domestic phosphate market (DAP/NP/Zorawar) had a sharp decline in demand as a result of the record floods, which led to sales falling to 333 KT in 2022 from 366 KT in 2021.

During the year, the company facilitated import substitution worth USD 1.3 billion. Overall, the implementation of the Super Tax caused Engro Fertilizers Limited’s profitability to decline by 24% to Rs.16 billion in 2022 from Rs.21 billion in 2021.

In the petrochemicals industry, it was stated that local supplies to the domestic PVC downstream market “continued unbroken due to consistent production at Engro Polymer & Chemicals Limited” while adding that “international PVC supply remained hampered due to the emergence of Covid-19 in China.”

Following meeting local PVC demand, the company also sold 26 KT worth of goods abroad, including 15 KT worth of caustic exports, for a total export value of USD 21 million. Also, the company permitted import substitution of USD 134 million.

Compared to Rs.70 billion in 2021, the EPCL’s sales in 2022 totaled Rs.82 billion. PAT decreased to Rs.12 billion for the year from Rs.15 billion in 2021, mostly as a result of the implementation of the Super Tax and the reversal of the commodity cycle.

In the telecommunication infrastructure: Engro Enfrashare (Pvt) Limited continued to expand its national footprint and achieved a scale of 3,329 tower sites with a 1.17x tenancy ratio during 2022 versus 2,246 tower sites with 1.1x tenancy ratio in 2021, catering to all four major Mobile Network Operators (MNOs) of Pakistan. The business captured a market share of 62% in Build-to-Suit (B2S) towers compared to other independent tower companies, leading to 2x revenue versus last year.

The co-location activities that were seen over the year, with a total of 560 co-location tenants versus 235 in 2021, indicating a 2.4x increase, further highlight the business’s potential for growth.

Friesl and Campina Engro Pakistan Limited experienced excellent growth momentum in the foods and rice sector as a result of good volumetric sales in the dairy and ice cream categories.

When compared to 2021, business saw a top-line increase of 40%, recording sales of Rs.73 billion as opposed to Rs.52 billion.

The company’s PAT increased by 39% from Rs.1.8 billion in 2021 to Rs.2.5 billion in 2022 as a result of volumetric growth, which is fueled by the development of the distribution network and a spike in demand following the floods.

Engro Eximp Agriproducts (Pvt) Ltd kept concentrating on exports as a major contributor to the nation’s foreign exchange reserves. Instead of selling 24 KT of rice abroad as it did previous year, the company sold 36 KT, bringing in USD 31 million. Supply to the local market dropped from 13 KT in 2021 to 12 KT in 2022, an 8% fall.