Engro Corp announces dividend of Rs40 per share, profit falls 41%

Pakistan’s conglomerate, Engro Corporation Limited (ENGRO), posted a Profit After Tax (PAT) of Rs8.8 billion in Q1 2023 (January-March), a decline of 41% as compared to Rs14.9 billion recorded in the same period of the previous year, showed the company’s financial results posted on Thursday.

The company in a statement attributed the decline in PAT to the macroeconomic headwinds resulting in commodity cycle reversal, lower DAP demand and increasing cost pressures.

The profit translates in to Earnings Per Share (EPS) of Rs8.18 in 1Q 2023, in comparison to Rs13.84 in same quarter last year.

“The result came below market expectations,” said Topline Securities in its note.

However, despite the significant plunge in profits, the board of Engro announced a Rs40 per share dividend i.e. 400% in Q1 2023.

Its share price ended at Rs309.61, a gain of Rs17.33 with a substantial volume of over 5.2 million scrips changing hands on Thursday.

Engro Corp announces financial results for 2022

The conglomerate said the decision “will not have a significant impact on long-term investment program of the company which will continue to be funded by retaining future dividends and/or capital reallocation”.

On a consolidated basis, Engro Corporation’s revenue grew by 10% to Rs97.3 billion in Q1 2023 from Rs88.3 billion in Q1 2022. However, the company’s gross profit declined by 6% to Rs25.56 billion as compared to Rs27.22 billion.

The other income of Engro jumped 72% YoY, clocking in at Rs6.85 billion during Q1 2023 as compared to Rs3.98 billion recorded in same period last year. This is “attributable to ascend in income from cash and cash balances,” said Arif Habib Limited (AHL).

Meanwhile, the company’s finance cost witnessed a massive jump of 117% YoY from Rs5.13 billion in Q1 2022 to Rs11.11 billion in Q1 2023.

On the fertiliser business, Engro Fertilizers (EFERT) posted a PAT of Rs4.4 billion in Q1 2023 against Rs5.5 billion in Q1 2022. “Profitability of the business was impacted by higher gas prices and lower margins on phosphates,” Engro said in its statement.

Net profit of Engro Polymer & Chemicals Limited (EPCL) was recorded at Rs1 billion in Q1 2023 against Rs5 billion in Q1 2022, “mainly attributable to commodity cycle reversal,” said the company.

“FrieslandCampina Engro Pakistan demonstrated a topline growth of 62%, reporting a revenue of Rs23 billion against Rs14 billion in the same period last year, due to volumetric growth driven by the expansion of its distribution network.

“The business recorded a PAT growth of 49% to Rs1 billion in Q1 2023 against Rs0.7 billion for the comparative period,” said the company.