Reports Rs0.03 earnings per share
Engro Polymer and Chemicals Limited reported a net profit of Rs29.8 million or Rs0.03 per share for the quarter ending June 2020.
The figures were down by 94% compared to Rs451 million or Rs0.5 per share it earned in the same period last year, the company’s financial results revealed Friday.
EPCL, a subsidiary of the Engro Corporation Limited, saw its revenue decline by 37% to Rs5.8 billion in the quarter ending June 2020, compared to Rs9.3 billion for the same quarter of the previous year.
The company held its analyst briefing on August 10 to discuss the financial results it revealed for the second quarter.
EPCL’s revenue declined due to lower sales volume caused by lockdowns wherein it sold 9,000 tons of caustic soda down 55% year on year basis and 33,000 tons of polyvinyl chloride (PVC) down 31% year on year basis, according to the briefing given by the company to analysts. The sale of caustic soda was down by 55% and that of PVC by 31% on a year-on-year basis.
Another factor that contributed to the lower revenue was the closure of EPCL’s plant from March 24 to April 20 due to the government orders.
PVC is a common thermoplastic used in construction and generally known for its hardness.
“The demand for PVC contracted by around 10%, the recovery of which is totally dependent on the economic situation going forward,” says a report by Taurus Securities on analyst briefing. “However, a boost in construction activity will likely support the demand but with lag.”
Strong demand for PVC has been witnessed after easing of lockdowns, according to EPCL management.
Demand for caustic soda witnessed a sluggish trend due to a decline in textile activity. The company said caustic soda demand is correlated more to woven fabrics segment, which has not yet recovered as such.
“Lower demand from textile industry was witnessed due to Covid-19, which resulted in lower domestic and export demand,” Sherman Securities said in its report.
According to the details provided by InterMarket Securities, the management stated that it expects to witness some improvement on the demand front as construction activity gains momentum. International PVC prices have also started to gain traction as plant operations march towards normalcy regionally. However, there may still be some uncertainty regarding the second wave of Covid-19.
Engro Polymer and Chemicals Limited is a subsidiary of Engro Corporation Limited. The company primarily manufactures, markets and sells PVC, vinyl chloride monomer, caustic soda and other chemicals. It is also engaged in the supply of surplus power generated from its power plants to Engro Fertilizers Limited.