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Engro Corporation Limited Interim / Quarterly Report 2024
71941_rns_2024-08-23_839bc4c4-1a51-436b-8d32-747b18fa1628.pdf
Interim / Quarterly Report
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engro
Engro Corporation
H1 2024 Analyst Briefing
August 2024
www.engro.com
H1 2024 Analyst Briefing
Important Disclaimer
THIS PRESENTATION IS NOT AN OFFER OR SOLICITATION OF AN OFFER TO BUY OR SELL ANY SECURITIES OR ANY INVESTMENT
This presentation has been prepared by Engro Corporation Limited (“Engro”) solely for information purposes. No representation or warranty express or implied is made thereto, and no reliance should be placed on, the fairness, accuracy, sufficiency, completeness or correctness of the information or any opinion contained herein, or any opinion rendered thereto. The information contained in this presentation should be considered in the context of the circumstances prevailing at the time and will not be updated to reflect any developments that may occur after the date of the presentation. Neither Engro nor any of its respective subsidiaries, affiliates, officials, advisors, associates, employees or any person working for, under or on behalf, shall have any responsibility and/or liability of any nature whatsoever (in contract or otherwise) for any loss whatsoever arising from any use of this presentation or its contents or otherwise arising in connection with this presentation.
This presentation does not constitute or form part of a prospectus, offering circular or offering memorandum or an offer, solicitation, invitation or recommendation to purchase or subscribe for any securities and no part of it shall form the basis of, or be relied upon in connection with, or act as any inducement to enter into any arrangement, agreement, contract, commitment or investment decision in relation to any securities. This presentation shall not at all be intended to provide any disclosure upon which an investment decision could be made. No money, securities or other consideration is being solicited, and, if sent in response to this presentation or the information contained herein, will not be accepted.
The presentation may contain statements that reflect Engro’s own beliefs and expectations about the future. These forward-looking statements are based on a number of assumptions about the future, which are beyond Engro’s control. Such forward-looking statements represent, in each case, only one of many possible scenarios and should not be viewed as the most likely or standard scenario. Such forward looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statements. Engro does not undertake any obligation to update any forward-looking statements to reflect events that occur or circumstances that arise after the date of this presentation and it does not make any representation, warranty (whether express or implied) or prediction that the results anticipated by such forward-looking statements will be achieved. In addition, past performance should not be taken as an indication or guarantee of future results.
Certain data in this presentation was obtained from various external data sources that Engro believes to its knowledge, information and belief to be reliable, but Engro has not verified such data with independent sources and there can be no assurance, representation or warranty as to the accuracy, sufficiency, correctness or completeness of the included data. Accordingly, Engro makes no assurance, representation or warranty as to the accuracy, sufficiency, correctness or completeness of that data, and such data involves risks and uncertainties and is subject to change based on various factors.
You agree to keep the contents of this presentation strictly confidential. All or any part of this presentation may not be taken away, reproduced, copied, redistributed, retransmitted or disclosed in any manner or form and for any purpose whatsoever.
By attending this presentation, you are agreeing to be bound by the foregoing limitations.
Company Profile: Click here
www.engro.com
H1 2024 Analyst Briefing
Agenda
| 1 | Group Overview | |
|---|---|---|
| 2 | Pakistan Economy | |
| 3 | Key Achievements during 1H 2024 | |
| 4 | Financial Highlights & Other Key Information | |
| 5 | Awards & Sustainability | |
| 6 | Q&A Session |
www.engro.com
H1 2024 Analyst Briefing
Overview
Pakistan Economy
Achievements
Performance
Awards & Sustainability
Group Overview
Companies and Legal Entities within Engro Corporation
Total Entities - 20
www.engro.com
H1 2024 Analyst Briefing
Overview
Pakistan Economy
Achievements
Performance
Awards & Sustainability
Despite IMF Agreement and structural reforms in place, Pakistan remains on protracted path towards economic stability
| 1H 2024 – Signs of improvement amidst few challenges | 2H 2024 – Economic environment to remain challenging | ||
|---|---|---|---|
| IMF ~ $1.1bn disbursement, CAD remained under control | Improvement in forex position to ease pressure on currency; PKR/USD expected to remain stable | ||
| Monetary easing by GoP, policy rate reduced to 19.5% | Interest rates may further reduce, however, financing cost to remain high compared to historical levels | ||
| The KSE 100 Index hits a record high of 81,839 points | Considering near term macro-outlook, stock market to remain positive | ||
| Inflation eased, but cost pressures remained high due to the elevated base effect | Inflation to ease on the back of past monetary measures, cost pressures to remain elevated | ||
| Depressed domestic demand due to distorted farmers’ economics and reduced purchasing power | Demand recovery for elastic goods on back of inflation ease | ||
| Elections successfully concluded with smooth transition of power | Govt to focus on implementation of structural reforms in compliance with IMF | ||
| Rising utility prices / living expenses, increased tax burden fueling brain drain from the country | Public frustration is mounting as living conditions continue to deteriorate |
www.engro.com
H1 2024 Analyst Briefing
Overview
Pakistan Economy
Achievements
Performance
Awards & Sustainability
Key Group Achievements during H1 2024
Leveraging improving macroeconomic conditions, the Group is resiliently positioned to remain on course to deliver exceptional performance
Performance Excellence
- EnVen plant successfully completed a major turnaround to ensure long-term reliability.
- Fertilizer business achieved import substitution of USD 271 mn and provided a discount of 22% to international urea prices.
- Contributed 15% towards gas supply of Country
- Contributed PKR 44 bn to government exchequer
- Contributed 2,041 GWH to the national grid
Capital Allocation
- Restructuring with Dawood Hercules – The scheme of arrangement filed by Engro Corp, DH Corp and DH Partners limited before the Islamabad High Court has been sanctioned. The effective date of the scheme of arrangement will be January 01, 2025.
- Thermal Divestments – The transaction is in-progress and remains subject to stakeholders' approval.
- Tower footprint expanded to 4,063 sites, capturing 52% of the ITC market.
Awards & Recognition
- 6th OICCI Women Empowerment Award for 'Conducive Workplace Environment'
- Two awards for Best Emerging Technology and Big Data Analytics
- Recognized at Pakistan Digital Award for Best Aerial & Underwater Robots
- Recognized Internationally with IFA Green Leaf Award for Safety and Sustainability
(Details ahead)
www.engro.com
H1 2024 Analyst Briefing
Overview
Pakistan Economy
Achievements
Performance
Awards & Sustainability
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Financial Highlights – H1 2024
| Consolidated Financial Highlights | As per Statutory Financial Statements | ||
|---|---|---|---|
| Revenue PKR 179 bn 22% vs LY | Profitability – Owners’ share PKR 6 bn 42% vs LY | EPS PKR 11.67 vs. 19.54 LY | |
| Standalone Financial Highlights | Last year's profitability includes profit from energy vertical | ||
| Profitability – Owners’ share PKR 5 bn 83% vs LY | EPS PKR 9.09 vs. 4.81 LY | ||
| Standalone Financial Highlights | Dividend & Royalty Income PKR 16.8 bn 38% vs LY | Profitability PKR 14.2 bn 50% vs LY | EPS PKR 26.46 PKR. 17.09 LY |
Highlights
Consolidated
Higher profitability from continued operations is attributable to:
- 17% higher Phosphates volume and 41% growth in specialty fertilizer volume
- Higher earnings from dollar denominated businesses
- Efficiencies derived through cost optimization
Partially netted off by:
- Lower PVC demand due to muted construction activities and lower core delta
- Increase in energy prices and cost of doing business
Standalone
Higher profitability mainly due to:
- Higher dividends from fertilizer business
- Cost optimization initiatives
www.engro.com
H1 2024 Analyst Briefing
Overview
Pakistan Economy
Achievements
Performance
Awards & Sustainability
^{}[]
Portfolio Performance – Petrochemicals
Company
Engro Fertilizers Limited
KPI
| Revenue PKR. | 113bn
37% vs LY |
| --- | --- |
| Profitability PKR. | 9.4bn
73% vs LY |
| Urea Volumes (KT) | 855KT
-17% vs LY |
Highlights
- Higher profitability due to increased DAP and specialty fertilizer volumes
- Ensured availability of urea to farmers at a discount of 22% over int. prices
- Business enabled import substitution of ~USD 271Mn
Outlook
- Specialty Fertilizers demand may be impacted on account of deteriorating farm economics
Engro Polymers Limited
| Revenue PKR. | 34bn
-7% vs LY |
| --- | --- |
| Profitability PKR. | -1.6bn
-158% vs LY |
| Domestic Sales | 95KT
vs. 92KT LY |
- Loss due to significant decline in global commodity prices, high energy costs and elevated financing cost coupled with subdued domestic construction activities
- Despite challenges in domestic market, EPCL delivered consistent domestics volumes at 95kT
Outlook
- With muted demand in India and China, international prices are expected to remain bearish
- Domestic PVC market to remain under pressure
www.engro.com
H1 2024 Analyst Briefing
Overview
Pakistan Economy
Achievements
Performance
Awards & Sustainability
Portfolio Performance – Terminals & Connectivity
Company
Engro Elengy & Vopak
KPI
| Chemical handled | 711KT
58% vs LY |
| --- | --- |
| LPG Market Share (adj.) | 66%
vs. 66% LY |
| % of total gas demand | 13% - 15% |
Highlights
- Higher chemical volumes handled driven by relative ease in LC opening compared to the same period last year and higher LPG marine imports resulting from proactive commercial efforts
- The LNG terminal handled 36 cargoes this year with availability over 97%
- Profitability remains strong driven by dollar denominated earnings
Outlook
- Considering ease in imports and proactive efforts, chemical handling likely to normalize in the current year
Engro Enfrashare Limited
| Operational Sites | 4,063
12% vs LY |
| --- | --- |
| Tenancy Ratio | 1.23x
vs. 1.18x LY |
- Captured 31% of the ITC colocations market
- Tower footprint increased by adding 111 towers, achieve a market share of 52% in the ITC market
Outlook
- Continue to increase footprint across Pakistan
- Incentivize colocation to enable better coverage across Pakistan
- Interest rates may continue to challenge in shorter term due to high base effect
www.engro.com
H1 2024 Analyst Briefing
Overview
Pakistan Economy
Achievements
Performance
Awards & Sustainability
Portfolio Performance – Energy & FZE (Trading)
Company
Engro Energy Limited
KPI
Highlights
- EPQL higher profitability attributable to efficient plant operations and higher interest income.
- EPQL Generation License acquired to include gas from Badar field as an alternate fuel.
- Mining operations continued smoothly
The divestment transaction is in-progress and the process of obtaining stakeholders' approval for transaction execution is underway.
Engro Eximp FZE
| Revenue
(USD Mn) | 201
29% vs LY |
| --- | --- |
| Total trade
Volume
(KT) | 331
25% vs LY |
- Strong focus on securing third party trades – 3P ratio improved to 23% versus 15% last year.
- Successfully secured first ever 3P DAP cargo in Pakistan.
Outlook
- Continue to expand our footprint in the Global Trade Market.
- Actively pursuing opportunities in the non-captive space
www.engro.com
1 Include both EPQL and EPTL
H1 2024 Analyst Briefing
Overview
Pakistan Economy
Achievements
Performance
Awards & Sustainability
Portfolio Performance – Foods
Company
Friesland Campina Engro
KPI
Revenue PKR. 55bn 17% vs LY
Profitability PKR. 1.3bn -7% vs. LY
Highlights
- Achieved topline growth on the back of favorable portfolio mix and expansion of retail network
- Decline in profitability is mainly due to significant increase in interest costs
Outlook
- The imposition of sales tax on packaged milk will add financial strain on consumers
- Continue driving efficiencies across the value chain to deliver growth in challenging macro environment.
www.engro.com
H1 2024 Analyst Briefing
Overview
Pakistan Economy
Achievements
Performance
Awards & Sustainability
Awards and Recognition
June 11, 2024
Engro Polymer and Chemicals has won two awards at Pakistan Digital Awards 2024 for Best Emerging Technology and Big Data Analytics, highlighting innovation in 3D modeling and hazard management.
May 8, 2024
Engro is honored with the 6th OICCI Women Empowerment Award for 'Conducive Workplace Environment 2023
May 23, 2024
Engro Fertilizers Recognized Internationally with IFA Green Leaf Award 2024 for Safety and Sustainability
June 11, 2024
Engro Fertilizers won Clarisync's 2024 Best Web/App Market Award for pioneering in-app dealer payments on PC and Android.
May 24, 2024
Engro VOPAK Terminals Limited has been recognized at Vopak Flow Forward Global Awards for WeConnect Foundation Award acknowledging long term project Uraan.
June 11, 2024
Engro Vopak is recognized at the 2024 Pakistan Digital Award for Best Aerial & Underwater Robots, showcasing innovation and excellence.
May 24, 2024
Engro VOPAK Terminals Limited has been recognized at Vopak Flow Forward Global Awards for Global Service Award.
Click on these links for details: Website
www.engro.com
H1 2024 Analyst Briefing
Overview
Pakistan Economy
Achievements
Performance
Awards & Sustainability
Sustainability Initiatives
www.engro.com
Click on these links for details: Sustainability Report and Website
Session
engro corp
Contact for Investor Relations
Faraz A. Jafri, General Manager Investor Relations
Engro Corporation Limited
8th Floor, The Harbour Front Building, HC # 3
Marine Drive, Block 4, Clifton, Karachi, Pakistan
Email: [email protected]
UAN +92-21-111-211-211
Company Profile: Click here