ISLAMABAD: Engro Corporation recorded strong revenue growth in 2023 with a remarkable 35% increase to reach Rs. 482 billion on a consolidated basis. Additionally, the company’s consolidated profit before tax (PAT), before accounting for the impact of revaluation of thermal power assets, surged to Rs. 66 billion compared to Rs. 46 billion in the previous year. This growth translated into Earnings Per Share (EPS) of Rs. 63.01, according to a press release issued here on Monday. Engro Corp Revenue Shows Strong Growth of 35% in 2023 On a consolidated basis, Engro Corporation’s revenue grew by 35% to Rs. 482 billion in 2023, while consolidated PAT before accounting impact due to revaluation of thermal power assets rose to Rs. 66 billion as against Rs. 46 billion last year, accounting for an EPS of Rs. 63.01.
The large variance can be attributed to higher urea sales, efficient plant operations, higher revenues from dollar-denominated businesses and efficiencies derived from cost optimization. However, after accounting for the accounting impact due to revaluation of thermal power assets, the consolidated PAT stood at Rs. 36 billion with EPS of Rs. 38.60 in 2023. Engro Corporation declared a final cash dividend of Rs. 2/- per share per year. This is in addition to the Rs. 46/- per share dividend declared during the year, taking the cumulative payout to Rs. 48/- per share. Referring to various disclosures made by the company on PSX regarding ongoing discussions with Liberty Mills Limited and other parties acting in concert, the company is now considering the execution of the proposed divestment of the company’s thermal power assets including the stake in Engro Powergen Qadirpur. Limited, Engro Powergen Thar (Pvt.) Limited and Sindh Engro Coal Mining Company Limited held through Engro Energy Limited through a share sale process.
The SECP vide SRO 986 (I)/2019 dated September 2, 2019 has granted special exemptions to Independent Power Producers (IPPs) from the applicability of IFRS 9, IFRS 16 and IAS 21. Consequently, the debt component recovered from CPPA-G as part of the NEPRA approved tariff is recognized as revenue in the profit and loss statement over the life of the loan. However, the corresponding depreciation expense related to the IPP is recorded over the term of the Power Purchase Agreement (PPA). The maturity of the loan is shorter than the term of the PPA, resulting in higher net assets in the consolidated financial statements of the group.
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In accordance with the requirements of IAS 36, the company assessed the recoverable amount of thermal energy assets for separate and consolidated financial statements. As a result of the specific accounting treatment for IPPs as mentioned above, the net assets of the thermal power assets in the consolidated financial statements of the Group are higher than their recoverable amount. Accordingly, the accounting impact of Rs. 30 billion (ownership: Rs. 13 billion) was reported in the consolidated financial statements for the year ended December 31, 2023. In the case of the Company’s Separate Financial Statements for the year ending December 31, 2023, no impact was recorded because the recoverable value of thermal energy assets is significantly higher than their book value.
The Fertilizer division achieved the historic milestone of the highest ever urea sales of 2,327 kt thanks to record urea production, cost optimization and long-term reliability projects implemented during 2022. The trade enabled import substitution of USD 0.8 billion by 2023. Despite macroeconomic headwinds, Engro Polymer and Chemicals Limited managed to maintain 89 percent market share by ensuring product availability and introducing various incentives to boost market confidence. The business recorded domestic sales of 199 kt, which helped replace imports of $91 million. As part of mitigating lower domestic demand, the business focused on export opportunities and achieved record export volumes of 44 kt, including lye exports of 22 kt, generating foreign exchange of USD 26 million for the period. Engro Enfrashare (Pvt.) Limited continued to expand its national footprint in towers, reaching a scale of 3,952 tower sites at 1.21x rental ratio in 2023 against 3,329 tower sites at 1.17x rental ratio in 2022, catering to all four major mobile network operators (MNO) of Pakistan.
In the energy sector, the mining business has committed to start Phase III expansion to increase capacity to 11.4 MTPA. Engro Powergen Thar (Pvt.) Limited achieved 82% availability during the year while Qadirpur Power Plant achieved 100% availability by ensuring efficient operation of the plant and dispatching 870 GWH of net electrical power to the national grid. Engro Elengy Terminal (Pvt) Limited handled 73 vessels during 2023 and supplied 215 bcf of regasified LNG to the SSGC network with an availability factor of 97.1%. The terminal contributed 13-15% to Pakistan’s total gas supply during the year. The chemical throughput of Engro Vopak Terminal was adversely affected by the interruption of operations of key customers, however, compared to last year, a significant 64% increase in LPG ship imports was recorded. Friesland Campina Engro Pakistan Limited maintained its growth momentum and achieved a record top line of Rs. 100 billion, representing a remarkable 36% increase compared to last year. Engro Eximp FZE, the international business arm of the company, which started trading in the UAE in 2022, has achieved a turnover of approximately USD 400 million including third party contracts.
