Karachi: Engro Corp increased its net earnings by more than 200% in the first half of 2015 and outperformed the benchmark Karachi Stock Exchange-100 Index by 41%, the company’s financial report revealed on Tuesday.
Pakistan’s largest private sector conglomerate reported an after-tax profit of Rs9.6 billion or Rs15.3 per share during the six-month period ending on June 30, 2015, up by a whopping 202% compared to Rs3.2 billion or Rs5.1 per share of the corresponding period of 2014.
The results, which analysts said were in line with market consensus, also accompanied an interim cash dividend of Rs4 per share leading the stock to increase by 0.25% and close at Rs337.6 per share at the close of market on Tuesday.
“Having out-performed the market by 41% (year-to-date), Engro Corp. remains one of the top performers at the bourse,” AKD Research said in its report, adding the stock performance was primarily backed by positive developments in the company’s foods and fertiliser businesses.
The company’s net sales increased by 13% to Rs87.8 billion in Jan-June period of 2015 compared to Rs77.5 billion it earned in the corresponding period of 2014. Its gross margin for the period improved by 565 basis points to 27.3%.
The increase in its volumes was owing to higher sales of fertiliser and foods businesses, which increased by 38% and 27%, the AKD report said. Moreover, a 15.2% year-on-year (YoY) decline in the finance costs, which amounted to Rs4.49 billion on the back of lower benchmark rates and 32% YoY increase in share of income from JV & associates also contributed to the sales growth, it added.
On a consequential basis, the net earnings increased by 26% to Rs5.3 billion in the quarter ending on June 30 compared to Rs4.3 billion it earned in the first quarter of 2015.
On a quarter-on-quarter basis, the revenues for the quarter ending in June increased by 18% to Rs46.4 billion due to 62% YoY increase in Engro Fertilizer sales in the second quarter of 2015, Topline Securities said in its report. Engro Foods revenues also increased by 25% YoY due to volumetric uptick in packed milk ‘OLPERS’ and tea whitener ‘TARANG’ coupled with price increase, it added.
The company’ gross profit for the quarter increased by 69% to Rs12.5 billion while gross margins improved by 806 basis points to 26.9% YoY, Topline said. “We attribute this improvement to flow of concessionary gas to Engro Fertilizer and lower international raw milk prices that substantially improved Engro Foods’ margins.”
