Karachi, Engro Polymer and Chemicals Ltd. (EPCL) has reported a significant 34% quarter-on-quarter increase in its earnings for the fourth quarter of CY23, reaching PkR3.5 billion, up from PkR2.6 billion in the previous quarter. This growth is primarily attributed to reductions in finance costs and improvements in gross margins. However, the company's dividend payout for the quarter remained below expectations, As per a press release from AKD Securities Limited.

According to AKD Securities Limited, EPCL's topline saw a 23% decrease from the previous quarter, totaling PkR19.2 billion, largely due to a seasonal slowdown in construction activities affecting sales volumes. Despite a decline in sales, the company's gross margins improved slightly to 26.9% from 26.1%, thanks to increased core margins that helped mitigate the impact of rising gas prices. Other income for the company also saw a 6.1% increase, likely driven by exchange gains following the Pakistani Rupee's appreciation.

A notable 80% quarter-on-quarter reduction in finance costs to PkR250 million, down from PkR1.2 billion, was highlighted as a key factor in the earnings surge, with the report suggesting adjustments on foreign loans as a possible cause. Nonetheless, further details on this reduction were not provided.

For the full year of CY23, EPCL's earnings per share amounted to PkR7.39, marking a 24% decline from the previous year, primarily due to shrinking PVC-Ethylene margins. Despite this, the company announced a final dividend of PkR1.0 per share, bringing the total dividend for the year to PkR6.0 per share. This resulted in a payout ratio of 61% for the year, a significant drop from the 98% average of the previous two years.