ENGRO posts Rs. 11.4 billion Half year Profit amid rising Admin Costs

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ENGRO posts Rs. 11.4 billion Half year Profit amid rising Admin Costs

Engro Corporation Ltd (ENGRO) announced it’s the Half Year 2019 financial Results where it posted Net Profit of Rs. 11.4 billion (EPS: Rs. 11.92), up 3% YoY. Profitability in 2QCY19 stood at R. 2.87bn (EPS: Rs. 4.97) down 29% QoQ. The quarterly decline in earnings is due to 191% QoQ rise in operating expenses (owing to 673% increase in Engro Polymer’s operating expense because of IFRS 16 implementation and FX losses).

Engro also experienced 107% QoQ higher finance cost as Interest Rates increases. Furthermore, the effective tax rate during the quarter increased to 50% as compared to 31% in the 1QCY19.

ENGRO also announced an interim cash dividend of Rs.8.0/share, taking Half Year payout to Rs. 15.0/share. Going onwards,  the persistence of higher divdend payouts contingent upon progress on potential ventures. ENGRO has already announced that a feasibility study is being done on the polypropylene manufacturing facility.

Rupees in Million  1HCY19   1HCY18  %Change
Net Revenue 85,989 71,733 20%
Cost of Sales 61,010 49,908 22%
Gross Profit 24,979 21,825 14%
Distribution Cost 3,097 3,564 -13%
Administrative Cost 2,403 1,780 35%
Other Expenses 2,743 2,260 21%
Other Income 6,416 4,972 29%
Finance Cost 4,644 2,444 90%
Share of Profit 690 -502 -238%
Profit Before Tax 19,198 16,246 18%
Tax 7,715 5,191 49%
Net Profit 11,483 11,055 4%
Earnings Per Share 11.92 11.63 3%
Dividend Per Share 15 12 25%

Investors have “Neutral” stance on the ENGRO as they await clarity on recently announced projects and the announcement of any new plans regarding utilization of huge cash balance held by the company.

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