engro chemicals earns rs695m
April 29, 2009
The News - Engro Chemicals has announced net earnings of Rs695 million for the quarter ended March 31, 2009, 15 per cent lower than Rs819 million profits in the corresponding quarter last year.
This translated into earning per share (EPS) of Rs2.33 against Rs2.75 in the corresponding quarter of 2008. “The decrease in earnings took place largely on account of higher financial charges and lower dividend income from subsidiaries and affiliates,” said Farhan Rizvi at JS Research.
The company recorded revenues of Rs5.7 billion in the quarter under review, up 26 per cent year-on-year basis, due largely to a sharp rise in urea prices. Average urea price was Rs680 per bag, nearly 33 per cent higher than that in the same quarter in 2008. Though gross margins fell slightly to 34 per cent (36 per cent in 2008), higher revenues propelled a gross profit to Rs1.9 billion, up 17 per cent on yearly basis.
Despite strong growth in the top line, higher financial and other charges, up a massive 98 per cent to Rs526 million, kept earnings on the lower side. Moreover, lower dividend income from subsidiaries and affiliates resulted in an 80 per cent decline in other income which was recorded at Rs46 million. Along with results, the company also announced that the board of directors has agreed to carry out a de-merger of Engro, as a result of which Engro’s fertilizer business is proposed to be bifurcated from Engro Chemicals and transferred/merged into a newly-incorporated and wholly-owned subsidiary, reported JS Research. Necessary approvals in this regard will be sought after that the company would file a de-merger petition in the Sind High Court. Resultantly, the fertilizer assets of the Engro will be substituted by shares of its wholly-owned subsidiary, added the brokerage house. Upon completion of the de-merger exercise, Engro will function as a pure holding company and oversee business of its new fertilizer subsidiary as well as businesses of its other subsidiaries/affiliate, it added.
