KARACHI, October 29 2024: Engro Corporation (ENGRO) released its financial results for the third quarter of 2024 today, revealing a significant decline in profitability. The company reported a profit attributable to equity owners of Rs5.7 billion, translating to an earnings per share (EPS) of Rs10.66, marking a substantial 53% decrease year-on-year. Adjusted for its thermal assets, the EPS stands at Rs10.64, which represents a 37% drop compared to the previous year. This performance was largely in line with market expectations.
Over the first nine months of 2024, Engro’s cumulative earnings reached Rs11.9 billion, resulting in an EPS of Rs22.33—a decline of 48% year-on-year. However, when excluding the thermal business, the EPS from continuing operations recorded a modest increase of 9% year-on-year, reaching Rs19.73.
A notable development for Engro is its recent decision to divest its thermal assets. In April 2024, the company entered a definitive agreement with Liberty Power Holding and other stakeholders to facilitate this sale, a move that reflects its strategic shift towards more sustainable operations.
Among its subsidiaries, Engro Fertilizers Limited (EFERT) experienced an 11% year-on-year dip in earnings, reporting Rs8.5 billion for 3Q2023. This downturn was primarily driven by a 33% reduction in urea offtake, attributed to higher urea prices compared to its peers, with a notable Rs200 per bag price differential impacting sales.
Engro Polymer (EPCL) faced a more challenging landscape, posting a loss of Rs698 million (loss per share: Rs0.77) in 3Q2024, a stark contrast to the profit of Rs2.6 billion recorded in the same period last year. The losses were largely due to reduced PVC volumes and lower core delta prices.
On a brighter note, Engro’s other income surged by 33% year-on-year to Rs3 billion in 3Q2024, driven by an increase in cash and cash equivalents. The effective tax rate remained stable at 43.7%, consistent with last year’s figures.
In unconsolidated results, ENGRO reported an EPS of Rs6.84 in 3Q2023, slightly down by 1% year-on-year. The decrease was influenced by lower dividend income from EFERT and muted contributions from EPCL, which reported losses.
Accompanying the earnings announcement, Engro declared a cash dividend of Rs5 per share, bringing the total payout for the first nine months of 2024 to Rs24 per share.
Despite the challenges faced in the current fiscal environment, analysts maintain a positive outlook on Engro Corporation, sustaining a “Buy” recommendation, especially given the stock’s attractive valuation at a projected 2025 P/E ratio of 5.9x.
As Engro navigates these tumultuous waters, the strategic focus on divesting thermal assets and strengthening core operations may pave the way for recovery and growth in the upcoming quarters.
