Engro Corporation (ENGRO) Thursday reported a 41% decline in profits for the first quarter of 2023, falling short of industry expectations.
According to analysts at Topline Securities, the company recorded earnings of Rs8.8 billion (Earning per share: Rs8.07), which is a decrease of 41% YoY and 43% QoQ. Despite the disappointing financial results, the company announced a bumper dividend of Rs40/share for 1Q2023, exceeding industry expectations of Rs10/share.
ENGRO’s subsidiaries, Engro Fertilizers Limited (EFERT) and Engro Polymer (EPCL), also saw declines in earnings. EFERT’s earnings were down 29% YoY to Rs4.4 billion due to the revision of gas prices based on fertilizer policy, higher PP12-based pricing, and higher transportation prices. Meanwhile, EPCL’s earnings were down 75% YoY to Rs1.2 billion due to lower PVC volumes, lower PVC Core Delta, and higher exchange losses.
On a standalone basis, ENGRO’s other operating expenses decreased by 82% YoY to Rs153 million in 1Q2023 mainly due to the absence of business development expenditure. Despite having Cash and Short Term Investments of Rs47.7 billion as of December 31, 2022, around Rs11.5 billion has been utilized for buyback, and around Rs21 billion will be used for dividend payouts, according to estimates.
While the company’s earnings report is below expectations, it is important to note that ENGRO’s financial performance is subject to many factors, including market volatility and economic conditions. The company’s upcoming initiatives and strategies could still yield positive results, and investors are advised to exercise caution and stay updated on ENGRO’s financial reports in the coming months.
