Engro Corp Profit Declines by 42% in First Half of 2024

Engro Corporation Limited (ENGRO) announced its 1HCY24 financial result with a consolidated profit after tax of Rs. 6.261 billion, depicting a decline of 42 percent YoY. On a quarterly basis, the consolidated earnings clocked in at Rs. 2.243 billion, plunging by 63 percent YoY. Alongside the result, the company announced a dividend of Rs. 8.00 per share in 2QCY24 (Rs. 19.00/share in 1HCY24). On the fertilizer business front, EFERT’s bottom line in 2QCY24 clocked in at Rs. 1.66 billion against Rs. 1.06 billion in SPLY, up by 57 percent YoY given a hike in urea and DAP price by 59 percent and 15 percent YoY, respectively coupled with an increase in DAP offtake by 16 percent YoY. Meanwhile, EPCL reported a loss of Rs. 688mn in 2QCY24 compared to a net profit of Rs. 1.56 billion in SPLY, owed to lower PVC margins tagged with higher gas prices. FCEPL posted earnings of Rs. 588 million, up by 75 percent YoY on the back of an increase in gross margins by 281bps to 17.55 percent amid higher sales of dairy products. The other income of ENGRO depicted a jump of 72 percent YoY during 2QCY24, which is attributable to a surge in income from cash and cash balances. The company booked a reversal of the loss allowance on subsidy receivable from Govt. amounting to Rs. 177 million in 2QCY24 against the loss allowance on subsidiary receivable from the government of Rs. 72 million in 2QCY23. The company booked effective taxation at 59 percent in 2QCY24 vis-à-vis 89 percent in 2QCY23. In addition to the result, the company reiterated that the financial results of thermal energy (EPTL, EPQL, and SECMC) have been reported as discontinued operations given that these companies have met the classification criteria of IFRS-5 related to “Non-Current Assets Held for Sale and Discontinued Operation”. The company posted earnings per share (EPS) of Rs. 4.18 for 1QCY24 and an EPS of Rs. 11.67 for 1HCY24. At the time of filing, ENGRO’s scrip at the bourse was Rs. 332, down 0.2 percent or Rs. 0.67 with over 118,000 shares on Thursday.