{"id":6038,"date":"2024-08-17T16:18:46","date_gmt":"2024-08-17T11:18:46","guid":{"rendered":"https:\/\/ksestocks.com\/blog\/?p=6038"},"modified":"2024-08-17T16:23:27","modified_gmt":"2024-08-17T11:23:27","slug":"what-is-behind-epcls-rough-quarter","status":"publish","type":"post","link":"https:\/\/ksestocks.com\/blog\/what-is-behind-epcls-rough-quarter\/","title":{"rendered":"What is behind EPCL\u2019s rough quarter?"},"content":{"rendered":"\n

Engro Polymer & Chemicals Ltd. (EPCL), one of the leading chemical companies in Pakistan, recently announced its financial results for the second quarter of CY24 and the figures reveal a challenging period. <\/p>\n\n\n\n

The company reported a Loss After Tax (LAT) of PKR 688 million<\/strong>, translating into an LPS of PKR 0.76<\/strong>.<\/p>\n\n\n\n

This marks a significant downturn compared to the same quarter last year, where EPCL had posted a Profit After Tax (PAT) of PKR 1,562 million<\/strong>, with EPS at PKR 1.39<\/strong>.<\/p>\n\n\n\n

Factors behind the decline<\/h2>\n\n\n\n

Several key factors contributed to this sharp decline in profitability:<\/p>\n\n\n\n

    \n
  1. Escalating gas prices<\/strong>: The chemical industry is highly sensitive to energy costs, and the rising gas prices have further squeezed EPCL\u2019s gross margins, which were already under pressure, remaining depressed at around 7% <\/strong>for the first half of the year.<\/li>\n\n\n\n
  2. Narrowed PVC-Ethylene Margins<\/strong>: The primary margin between Polyvinyl Chloride (PVC) and ethylene, a major revenue stream for EPCL, has significantly shrunk. This compression in margins directly impacted the company’s profitability, leading to reduced earnings.<\/li>\n\n\n\n
  3. Increased Finance Costs<\/strong>: The company also faced a 37%<\/strong> year-over-year increase in finance costs, largely due to higher borrowings. This surge in costs further eroded the bottom line, contributing to the overall loss.<\/li>\n\n\n\n
  4. Decline in Revenue and Other Income<\/strong>: EPCL’s revenue took a 6% <\/strong>year-over-year hit, exacerbating its financial woes. In addition, other income, typically a buffer against operational challenges, plummeted by 64% <\/strong>YoY, primarily due to a reduction in short-term investments<\/li>\n<\/ol>\n\n\n\n

    Future Outlook<\/h2>\n\n\n\n

    The current financial scenario for EPCL is undoubtedly challenging, but it also presents an opportunity for introspection and strategic realignment. <\/p>\n\n\n\n

    Engro group is currently going through some restructuring with its parent company Dawood Hercules (DAWH). It is also selling some of its assets. In a challenging business environment, it is hard to see when EPCL will turnaround.<\/p>\n\n\n\n

    However, one thing is clear the turnaround will only happen when international PVC margins improve substantially. Local construction demand is also important.<\/p>\n\n\n\n

    There doesn’t seem to be any upside trigger for the stock in the short term.<\/p>\n\n\n\n

    <\/p>\n\n\n\n

    <\/p>\n","protected":false},"excerpt":{"rendered":"

    EPCL announced its financial results for the second quarter of CY24, and the figures reveal a challenging period. The company reported a Loss After Tax (LAT) of PKR 688 million, translating into a Loss Per Share (LPS) of PKR 0.76.<\/p>\n","protected":false},"author":4890,"featured_media":4181,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[138,2],"tags":[44],"class_list":["post-6038","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-financials","category-psx-blog","tag-epcl"],"featured_image_src":{"landsacpe":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2024\/04\/EPCL-Financials-1140x445.png",1140,445,true],"list":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2024\/04\/EPCL-Financials-463x348.png",463,348,true],"medium":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2024\/04\/EPCL-Financials-300x188.png",300,188,true],"full":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2024\/04\/EPCL-Financials.png",1920,1200,false]},"_links":{"self":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts\/6038","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/users\/4890"}],"replies":[{"embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/comments?post=6038"}],"version-history":[{"count":0,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts\/6038\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/media\/4181"}],"wp:attachment":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/media?parent=6038"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/categories?post=6038"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/tags?post=6038"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}