The company posted a decline of 38.2 percent in earnings, as against the profit of Rs3.4 million and EPS of Rs10.51 in 2019, primarily due to subdued demand and lower sales.
Company’s sales revenues clocked in at Rs8.09 million in 2020, down 38.7 percent compared with the revenues of Rs13.2 million in the corresponding year.
Engro Powergen also announced final cash dividend of Rs1.75 ie 17.5 percent along with corporate announcement, which is in addition to interim cash dividend for the half year ended June 30, 2020 already paid at Rs1.25 or 12.5 percent.
Ahsan Mehanti at Arif Habib Limited said Engro Powergen’s cost of operations increased during the year due to higher finance costs.
Circular debt is an issue impacting all independent power producers (IPPs), which increased the finance costs.
“Although, there has been no decline in electricity demand during the year, the increase in tariff impacted the company’s sales revenues. On the other hand lower interest rates regime impacted the company’s interest income on investments.”
It may be mentioned here that Engro Powergen has entered into a memorandum of understanding with the government that all undisputed outstanding amounts due and payable to Engro under the power purchase agreement, as on November 30 2020, would be paid in two instalments.
Further, Engro has agreed to accept a reduction in the tariff component, whereby the return on equity (RoE) and the return on equity during construction (RoEDC) would be fixed at 17 percent/annum in rupees.
Engro Polymer full-year profit surges 54.4pc
Engro Polymer & Chemical Limited has announced a net profit of Rs5.712 million for the year ended December 31, 2020 translating into EPS of Rs6.28, a bourse filing said.
Engro Polymer’s profits have registered an increase of 54.4 percent against the profit of Rs3.7 million (EPS: 3.69) recorded in 2019. “We believe higher realised margins helped the company exceed earnings expectations,” an analyst at Taurus Securities said.
Final cash dividend for the year ended December 31, 2020 was approximately Rs1.247/share ie 12.47 percent.
The company recorded net revenues of Rs35.33 million in 2020, down 6.6 percent from the revenues of Rs37.8 million posted in 2019.
“Engro Polymer’s gross margin increased to 47 percent during the fourth quarter of 2020 from 21 percent in the corresponding quarter last year, driven by higher average international PVC-Ethylene spread,
suspension of Gas Development Infrastructure Cess (GIDC) and rupee devaluation,” an analyst at Sherman Securities noted in a report.
Operating costs declined during the year on account of 38 percent decline in distribution and marketing expenses; however, finance costs surged 23 percent to 2.19 million despite lower interest rates.
