Engro Polymer Posts Rs. 1.6 Billion Loss for H1 2024

Engro Polymer & Chemicals (EPCL) announced its 2Q2024 result today, where the company recorded a consolidated loss of Rs. 688 million. This took 1H2024 loss to Rs. 1.6 billion against a profit of Rs. 2.7 billion in 1H2023. The 2Q2024 loss came higher than industry expectations due to higher-than-expected finance costs, according to Topline Securities. The finance cost came at Rs. 2.1 billion, up 37 percent YoY and 27 percent QoQ in 2Q2024 due to higher borrowings. Net sales of the company declined by 6 percent YoY to Rs. 17.8 billion in 2Q2024 due to lower PVC prices at US$ 810/MT vs US$ 830/MT in 2Q2023. Gross margins arrived at 8 percent in 2Q2024 vs 30 percent in 2Q2023, mainly due to lower primary margins and an increase in gas prices. While on a QoQ basis, gross margins improved by 163 bps compared to 7.3 percent in 1Q2024. The core delta for 2Q2024 remained at US$ 318/MT against US$ 309/MT in the preceding quarter and US$ 385/MT in 2Q2023. Distribution expense increased by 33 percent/29 percent YoY/QoQ to Rs. 185 million mainly derived by the inflationary environment. Other income decreased by 64 percent/32 percent YoY/QoQ in 2Q2024 to Rs. 120 million, possibly due to lower short-term investments and declining interest rates. Similarly, other expenses decreased by 92 percent YoY in 2Q2024 due to the absence of exchange loss during the period. EPCL booked a tax reversal of Rs. 639 million in 2Q2024 against the taxation of Rs. 1.85 billion in 2Q2023. The company posted a loss per share of Rs. 0.76 for 2Q2024 and an LPS of Rs. 1.75 for H1 2024. At the time of filing, EPCL’s scrip at the bourse was Rs. 39.36, down 5.32 percent or Rs. 2.21 with 1.8 million shares on Friday.