Engro Polymer (EPCL) Q1 earnings review
Foundation Securities Pvt Ltd has just released an update on Engro Polymer & Chemicals Limited’s (EPCL) recent quarterly results. Here are the important points from the EPCL earnings announcement:
Overview
EPCL, a key player in the chemical industry, faced challenges in the first quarter of CY24. The company reported a loss per share (LPS) of Rs0.65, marking a significant decline compared to the same period last year.
Factors Impacting Performance
PVC-Ethylene Margin Decline
EPCL’s profitability took a hit due to a 30% year-over-year decrease in PVC-Ethylene margin. This decline, with an average margin of US$303/ton during 1QCY24, compared to US$433/ton in the same period last year, contributed to the negative performance.
Rise in Administrative Expenses
Administrative expenses surged by 147% year-over-year, primarily due to high inflation experienced during the preceding year, adding pressure to EPCL’s financials.
Other Expense Reduction
While other expenses declined significantly by 97% year-over-year in 1QCY24, compared to the same period last year, this was attributed to lower foreign exchange losses and reduced expenses amid lower profitability.
Financial Costs
EPCL witnessed a 42% year-over-year increase in finance costs during the first quarter of CY24, driven by a 28% rise in borrowing and record-high interest rates.
Outlook
The outlook remains challenging for EPCL. With global economic slowdown impacting PVC prices and PVC-Ethylene International margin expected to remain range-bound, EPCL’s profitability may face further pressure.
Financial Highlights
Here are the financial highlights for Engro Polymer & Chemicals Limited (EPCL) in the first quarter of CY24:
| Rs (Million) | 1QCY24 | 1QCY23 | YoY Change | QoQ Change |
|---|---|---|---|---|
| Net Sales | 16,565 | 17,978 | -8% | -14% |
| Cost of Goods Sold | 15,500 | 14,387 | 8% | 10% |
| Gross Profit | 1,064 | 3,591 | -70% | -79% |
| Distribution & Marketing Expenses | 142 | 142 | 0% | -64% |
| Administrative Expenses | 677 | 274 | 147% | -6% |
| Other Expenses | 21 | 764 | -97% | -124% |
| Other Income | 285 | 438 | -35% | -49% |
| Finance Cost | 1,664 | 1,170 | 42% | 605% |
| Profit Before Tax (PBT) | (1,156) | 1,678 | -169% | -126% |
| Tax | (371) | 489 | -176% | -153% |
| Profit After Tax (PAT) | (784) | 1,189 | -166% | -121% |
| EPS – Basic | (0.86) | 1.14 | ||
| EPS – Diluted | (0.65) | 0.86 | ||
| DPS – Ordinary | – | 1.00 | ||
| DPS – Preference | – | 0.50 | ||
| Gross Margin | 6.4% | 20.0% | ||
| Net Margin | -4.7% | 6.6% | ||
| Effective Tax Rate | 32.1% | 29.1% |
Disclaimer:
The information in this article is based on research by Foundation Securities Pvt Ltd. All efforts have been made to ensure the data represented in this article is as per the research report. This report should not be considered investment advice. Readers are encouraged to consult a qualified financial advisor before making any investment decisions.
Comment (1)
[…] EPCL announced its quarterly earnings recently and we covered why the EPCL stock fell afterwards. Its struggles are by no means over. But stocks usually bottom out well before the retail investor realizes the business environment has changed. […]