Engro Polymer’s Profit Declines by Staggering 75% in Q1 2023

Engro Polymer & Chemicals Limited (PSX: EPCL) has announced its financial results for the quarter that ended on March 31, 2023 (1QCY23). According to the company’s consolidated financial results, it posted a profit after tax of Rs. 1.18 billion during 1QCY23 compared to a profit after tax of Rs. 4.71 billion reported in the corresponding period last year, registering a decline of 75 percent year on year (YoY). Along with the result, the company announced a cash dividend of Rs. 1 per share. During the quarter, net sales witnessed a decline of 22 percent YoY to settle at Rs. 17.97 billion as compared to Rs. 23.12 billion, mainly attributable to lower PVC prices (-36 percent YoY) and a 19 percent YoY decline in PVC volumetric sales to 52,000 tons. The volumetric sales of caustic soda also dropped by 18 percent YoY to 14,000 tons, according to Arif Habib Limited (AHL). The gross margins of the company went down from 33 percent last year to 19.9 percent in 1QCY23 owed to higher gas prices along with depressed PVC margins (-46 percent YoY). However, the 32 percent Pakistani rupee depreciation against the US Dollar during the quarter cushioned the decline. Other expenses declined by 10 percent to Rs. 766 million during 1QCY23 compared to the previous year. Meanwhile, other income during the quarter stood at Rs. 444 million, up 3 percent from Rs. 432 million reported in the previous year. The finance cost of the company surged by 92 percent to Rs. 1.17 billion compared to Rs. 0.613 billion reported in the previous year. EPCL’s effective tax rate during Q1 arrived at 29 percent compared to 25 percent in the same period last year. The company reported earnings per share (EPS) of Rs. 1.30 in 1QCY23 compared to an EPS of 5.19 reported in the previous year. EPCL’s scrip at the bourse closed at Rs. 44.44, down 3.33 percent or Rs. 1.53 with a turnover of 4,166,256 shares on Monday.