EPCL is expected to report another quarterly loss in 2QCY25

Engro Polymer & Chemicals Ltd (EPCL) is likely to post a loss of Rs1.18 per share in the second quarter of 2025 (2QCY25), showing a deeper loss than both last year and the previous quarter. The company’s after-tax loss is expected to reach Rs1.1 billion, compared to Rs825 million in 1QCY25 and Rs688 million in the same quarter last year.

What’s going wrong?

The main reasons behind the weak results are:

• Lower product prices: International PVC prices have dropped by 14% year-on-year (YoY) and 6% quarter-on-quarter (QoQ), landing at around $700 per ton.
• Falling margins: The difference between PVC and its raw material ethylene (called the core delta) has shrunk by 18% YoY and 8% QoQ.
• Low sales: EPCL’s revenue is expected to decline slightly by 2% both YoY and QoQ to Rs17.5 billion.
• Higher admin costs: Administrative expenses have increased by 11% YoY.

All of this has pushed gross margins (how much profit the company earns after covering basic costs) down to just 7% in 2QCY25, compared to 8.1% last year.

Any good news?

Yes, a few things are going right:

• Lower finance costs: Due to falling interest rates and lower debt, EPCL’s financial charges are expected to drop by 36% YoY.
• Sales & distribution costs are under control: These expenses are down 27% YoY.

However, the positive impact from these savings isn’t enough to offset the pressure from falling prices and margins.

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EPCL continues to struggle with global price pressures and weaker margins. The company has now reported back-to-back quarterly losses, and until PVC prices recover or margins improve, profitability will remain under pressure.

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Source: Insight Securities (Private) Limited

⚠️ This post reflects the author’s personal opinion and is for informational purposes only. It does not constitute financial advice. Investing involves risk and should be done independently. Read full disclaimer →