Engro posts 14% increase in revenue generation

ISLAMABAD: Engro Corporation Limited (PSX: ENGRO) on Thursday said its ‘standalone revenue’ had increased from Rs 21 billion to Rs 24 billion in 2022 as compared to the last year, exhibiting a healthy
growth of 14 percent.

“Higher revenue was achieved primarily due to higher dividends received from Engro Polymer Chemicals Limited (EPCL), Engro Fertilizers Limited (EFERT), and Engro Energy Limited (EEL) which, in turn, were driven by strong underlying business performance,” the company said while announcing its financial results for the year ended December 31, 2022.

The company achieved an 11 percent higher PAT of Rs 21 billion in 2022 against Rs. 19 billion in 2021, translating into an EPS of Rs 36.79 per share (2021: Rs. 32.14 per share).

On a consolidated basis, Engro Corporation’s revenue grew by 14 percent to Rs 356 billion in 2022 from Rs 312 billion in 2021. The company posted a PAT of Rs 46 billion in 2022, which is 13% lower than Rs 53 billion in 2021 on account of a Super Tax charge of 4% on retrospective and current year earnings and a one-off adjustment of Engro Powergen Thar Limited (EPTL) tariff true-up adjustment.

The PAT attributable to the shareholders decreased to Rs 24 billion from Rs 28 billion in 2022,translating to an EPS of Rs 42.23 per share (2021: Rs. 48.50 per share).

Engro Corporation announced a final cash dividend of Rs. 1/- per share for the year. “This is in additionto the Rs. 33/- per share dividend announced during the year, bringing the cumulative payout to PKR34/- per share.”

The company said in the fertilizer sector, the domestic market witnessed adverse implications of the global economic downturn and recent severe flooding in the country. “Urea sales decreased to 1,936 KT compared with 2,295 KT in 2021, due to a 60-day LTR (Long Term Turnaround), which was the longest LTR in the last 50 years.

This was achieved with a “ZERO” TRIR (Total Recordable Injury Rate) and no unplanned outages.
Following the completion of this successful LTR, the performance of the facility is expected to improve with a reduction in the energy index and capacity enhancement by ~ 170KT per annum, it said.

International DAP prices decreased to USD 730 per ton on the back of a slowdown in global demand and commodity cycle reversal. Due to unprecedented floods, the domestic phosphate market (DAP / NP /
Zorawar) witnessed a drastic fall in demand, resulting in sales declining to 333 KT in 2022 from 366 KT in 2021.

The business enabled import substitution to the tune of USD 1.3 billion during the year. On an overall basis, the profitability of Engro Fertilizers Limited decreased by 24% to Rs. 16 billion in 2022 against Rs. 21 billion in 2021, impacted by the levy of Super Tax.

In the petrochemicals sector, it said international PVC supply remained disrupted due to the resurgence of Covid-19 in China, adding “local supplies to the domestic PVC downstream market continued uninterrupted due to steady production at Engro Polymer & Chemicals Limited.”

After catering to local PVC demand, the business also recorded export sales of 26 KT, including caustic exports of 15 KT, translating to an export value of USD 21 million. The business also enabled import substitution to the tune of USD 134 million.

The EPCL recorded sales of Rs. 82 billion in 2022 versus Rs. 70 billion in 2021. PAT for the year declined to Rs. 12 billion from Rs. 15 billion in 2021, primarily due to the imposition of Super Tax and commodity cycle reversal.

In the telecommunication infrastructure: Engro Enfrashare (Pvt) Limited continued to expand its national footprint and achieved a scale of 3,329 tower sites with a 1.17x tenancy ratio during 2022 versus 2,246 tower sites with 1.1x tenancy ratio in 2021, catering to all four major Mobile Network Operators (MNOs) of Pakistan. The business captured a market share of 62% in Build-to-Suit (B2S) towers compared to other independent tower companies, leading to 2x revenue versus last year.

Growth potential in the business is further demonstrated by the co-location activities witnessed during the year, with total co-location tenants of 560 versus 235 in 2021, representing a 2.4x increase.

In foods & rice, the Friesl and Campina Engro Pakistan Limited witnessed robust growth momentum on the back of strong volumetric sales in both the Dairy and Ice Cream segments.

Business demonstrated a top-line growth of 40%, recording sales of Rs. 73 billion as compared to Rs. 52 billion in 2021.

The business recorded a PAT growth of 39% from Rs. 1.8 billion in 2021 to Rs. 2.5 billion in 2022 due to volumetric growth is driven by distribution network expansion and a surge in demand post-floods.

Engro Eximp Agriproducts (Pvt) Limited continued its focus on exports as a key contributor to the foreign reserves of the Country. The business generated a revenue of USD 31 million through the international sale of 36 KT of rice against 24 KT last year. Supply to the local market decreased by 8% to 12 KT during 2022 versus 13 KT last year.

In energy and power, the mining operations continued smoothly during the year supplying coal to Engro Powergen Thar Limited, Thar Energy, and Lucky Electric Power Company.

The mine’s Phase II expansion was achieved during the year, which doubled capacity to 7.6 million tons per year, effective October 1, 2022.

The government of Sindh has also approved Phase III capacity enhancement to 11.4 million tons per year. The business enabled import substitution to the tune of USD 320 million during the year.
EPTL dispatched 3,679 GWH to the national grid compared to 4,225 GWH last year and achieved 73% availability as compared to 83% last year.

Plant availability remained low in the first quarter but, after a detailed inspection and necessary rehabilitation work, both units of the plant successfully came fully back online.

Engro Powergen Qadirpur Limited dispatched a Net Electrical Output of 768 GwH to the national grid with a load factor of 41%. Scheduled maintenance outage was undertaken for a major overhaul, conducted every sixth year. The business posted a PAT of Rs. 1.5 billion in 2022 as compared to Rs. 1.6
billion for 2021.

Engro Elengy Terminal (Pvt) Limited handled 74 vessels during 2022 versus 72 vessels in 2021, delivering 219 bcf of re-gasified LNG into the SSGC network with an availability factor of 97.6%. The Terminal contributed 15% of Pakistan’s total gas supply during the year.

Engro Vopak Terminal Limited recorded the highest ever volumetric increase in chemical handling to 1,331 KT in 2022 against 1,280 KT last year, attributable to higher imports of phosphoric acid and paraxylene which was offset by lower LPG marine imports of 32% over last year, primarily driven by gray channel imports.