Engro Corporation Limited (ENGRO) announced a significant decline in its financial performance for the nine months ending September 2024 (9MCY24), reporting a consolidated profit after tax of PKR 11,983 million, or PKR 22.33 per share. This reflects a steep 48% drop year-on-year, as challenging market dynamics, higher costs, and reduced demand affected its key business sectors.
For the third quarter of CY24, Engro’s consolidated earnings registered at PKR 5,722 million (EPS: PKR 10.66), marking a substantial 53% decline compared to the same period last year. Despite these figures, the corporation declared a dividend of PKR 5.00 per share for the third quarter, bringing total dividends for 9MCY24 to PKR 24.00 per share.
Within its fertilizer division, Engro Fertilizers (EFERT) saw earnings reach PKR 8,554 million (EPS: PKR 6.41) for the third quarter, down by 11% from last year. This decline stemmed from a 33% drop in urea offtake and a 14% decline in DAP offtake, compounded by rising finance costs due to increased short-term borrowings.
In Engro’s polymer business, Engro Polymer & Chemicals Limited (EPCL) recorded a loss of PKR 698 million (LPS: PKR 0.77) compared to a net profit of PKR 2,642 million (EPS: PKR 2.91) in the same period last year. The drop was driven by heightened gas prices and weaker margins on PVC, both of which cut into profitability.
On a brighter note, FrieslandCampina Engro Pakistan Limited (FCEPL), Engro’s dairy segment, showed impressive growth, posting a profit of PKR 766 million (EPS: PKR 1.00). This threefold year-on-year increase in earnings came as gross margins expanded by 190 basis points to 15.40%, fueled by strong sales in dairy products.
Engro’s other income saw a 53% year-on-year increase for the third quarter, primarily attributed to higher earnings from cash and cash reserves. Meanwhile, the company’s finance costs surged by 41% due to elevated short-term borrowing costs, adding further pressure to overall profitability.
Additionally, Engro reported a gain of PKR 464 million in the third quarter from government subsidy receivables, a notable improvement over the PKR 1 million gain in the same period last year. Effective taxation stood at 39.95% for 3QCY24, a slight decrease from 40.54% in the previous year.
Engro Corporation, a key player in Pakistan’s industrial sector, continues to navigate a volatile economic environment marked by cost pressures and fluctuating demand. The results highlight both the resilience and challenges facing Engro as it adapts to shifting market dynamics, with the company leveraging a diversified portfolio to sustain operations amidst these headwinds.