Karachi, August 11, 2022 (PPI-OT): EPCL: 2QCY22 Result Review – Above expectation

Engro Polymer and Chemicals Limited (EPCL) has announced its 2QCY22 result, where it posted consolidated profit of PkR2.3bn (EPS: PkR2.45). This takes cumulative 1HCY22 PAT to PkR7.05bn (EPS: PkR7.55) vs PAT of PkR7.26bn (EPS: PkR7.89) in same period last year. The result is above our expectation due to lower effective tax rate and higher volumetric sales. Company also announced cash dividend of PkR2.5/sh.

Revenue for the quarter clocked in at PkR22.3bn vs our expectation of PkR21.1bn. Company recorded growth of ~50% in topline as compare to SPLY, possibly due to higher volumetric sales. On QoQ basis, revenue fell by ~4% owing to lower PVC prices and slowdown in volumetric sales.

Gross margins clocked in at 33.8% vs 33.1% in 1QCY22.

Finance cost witnessed a surge of 44%/20% on YoY/QoQ basis, attributable to higher financing rate.

Taxation charge recorded an increase of 3x/2x on YoY/QoQ basis, owing to imposition of super tax. Effective tax rate clocked in at ~58% vs our estimate of 70%.

Company announced cash dividend of PkR2.5/sh, taking 1HCY22 dividend to PkR7.5/sh vs PkR7.8/sh in SPLY.