Karachi: Engro Polymer and Chemicals Ltd. (EPCL) reported a significant third-quarter loss for the calendar year 2024, marking its third consecutive quarter in the red. The company posted a loss of PKR 698 million, a stark contrast to the earnings of PKR 2.6 billion recorded in the same period last year.

According to AKD Securities Limited, the loss was notably below expectations, primarily due to weaker-than-anticipated core margins and high finance costs. The company’s gross margins saw a severe contraction, falling to 5.5% from 26.1% in the same quarter last year, driven by a combination of reduced core delta margins and increased energy costs following a significant rise in indigenous gas tariffs.

Revenue for the quarter stood at PKR 20.0 billion, down 20% year-over-year from PKR 25.0 billion, largely due to decreased sales volumes amidst a slowdown in construction activities and lower PVC prices. Additionally, finance costs for the company surged by 59% compared to the same period last year, exacerbated by increased short-term borrowing. The company also recorded a tax reversal of PKR 749 million due to booked losses, contributing to a total tax reversal of PKR 1.8 billion for the first nine months of the year.

Overall, Engro Polymer’s losses for the first nine months of 2024 have accumulated to PKR 2.3 billion, in sharp contrast to the earnings of PKR 5.4 billion during the same period last year. AKD Securities maintains a ‘Sell’ stance on the stock, with a target price of PKR 33 per share set for June 2025.