Engro Corp Reports Impressive 35% Revenue Growth in 2023

Engro Corp Reports Impressive 35% Revenue Growth in 2023

Karachi, February 26 – Engro Corp, a leading Pakistani conglomerate, has announced a robust 35% growth in revenues, reaching PKR 482 billion in 2023.

The company’s consolidated Profit After Tax (PAT) before accounting for the impact of remeasurement of thermal energy assets surged to PKR 66 billion, up from PKR 46 billion the previous year, resulting in an Earnings Per Share (EPS) of PKR 63.01.

The significant uptick in revenues is attributed to increased urea sales, streamlined plant operations, enhanced earnings from dollar-denominated businesses, and efficiencies achieved through cost optimization.

However, factoring in the accounting impact due to the remeasurement of thermal energy assets, the consolidated PAT settled at PKR 36 billion, with an EPS of PKR 38.60 for the fiscal year 2023.

In recognition of the company’s strong performance, Engro Corp has declared a final cash dividend of PKR 2 per share for the year, supplementing the earlier dividend of PKR 46 per share. The cumulative payout now stands at PKR 48 per share.

Proposed Divestment of Thermal Energy Assets

Engro Corporation is currently exploring the possibility of divesting its thermal energy assets, which include shareholdings in Engro Powergen Qadirpur Limited, Engro Powergen Thar (Pvt.) Limited, and Sindh Engro Coal Mining Company Limited, held via Engro Energy Limited. This move is being considered through a sale of shares process.

The decision follows disclosures made at the Pakistan Stock Exchange (PSX) regarding ongoing discussions with Liberty Mills Limited and other entities acting in concert.

Accounting Impact and Evaluation of Thermal Energy Assets

The specific accounting treatment for Independent Power Producers (IPPs), as granted by the Securities and Exchange Commission of Pakistan (SECP), has led to a unique situation for Engro Corp. The Net Assets of thermal energy assets in the Consolidated Financial Statements are higher than their recoverable amounts due to the recovery of the debt component from CPPA-G over the life of the loan.

As per the assessment carried out in accordance with IAS 36, an accounting impact of PKR 30 billion (Owners’ Share: PKR 13 billion) has been recognized in the Consolidated Financial Statements for the year ended December 31, 2023.

Portfolio Performance Highlights

Engro’s Fertilizer business achieved a historic milestone with the highest-ever urea sales of 2,327 KT, contributing to import substitution worth USD 0.8 billion in 2023. Engro Polymer and Chemicals Limited maintained an 89% market share, recording domestic sales of 199 KT and focusing on export opportunities.

Engro Enfrashare (Pvt.) Limited expanded its national tower footprint, achieving 3,952 tower sites with a 1.21x tenancy ratio, while Engro Powergen Thar (Pvt.) Limited achieved 82% availability. Engro Elengy Terminal (Pvt) Limited contributed significantly to Pakistan’s gas supply, handling 73 vessels during 2023.

FrieslandCampina Engro Pakistan Limited achieved a record-breaking topline of PKR 100 billion, marking a 36% increase, and Engro Eximp FZE, the international trading arm, reported a turnover of approximately USD 400 million.

Despite macro-economic challenges, Engro Corp’s diverse portfolio and strategic initiatives have led to a strong financial performance in 2023.