The management of Engro Polymer & Chemicals Ltd (EPCL) held a corporate briefing session today to discuss the financial results for 9MCY23 and the outlook. Hydrogen Peroxide and High-Temperature Direct Chlorination (HTDC) projects will come online by Mar’24.

Brief Takeaways

To recall, the company posted a profit after tax (PAT) of PKR 5.4bn (EPS: PKR 5.93) in 9MCY23, down by 42% YoY compared to PKR 9.3bn (EPS: PKR 10.24) during SPLY. On a YoY basis, the decline in earnings is due to lower international PVC margins, higher finance costs, and an increase in gas prices.

Total sales remained stable during 9MCY23 clocking in at PKR 62.0bn compared with PKR 62.3bn SPLY. However, the volumetric sales declined by 3% YoY during 9MCY23.

During 3QCY23, PVC volumetric sales increased by 34% YoY |39% QoQ to 68K tons primarily due to the rise in construction activities in the country. The company also exported 12K tons of PVC.

During 9MCY23, the sales volume of caustic soda increased by 22% YoY to settle at 59K tons.

During 3QCY23, caustic soda witnessed a volumetric growth by 53% YoY to 23K tons compared to 15K tons during 3QCY22. This rise in caustic sales is because of higher local demand.

Other expenses increased by 132% QoQ to PKR 818mn during 3QCY23 due to exchange losses.

The management mentioned the gas availability and blended gas rates are expected to affect the margins.

The management disclosed that the Core Delta has improved on QoQ basis.

Ethylene prices are also expected to be impacted by crude oil prices and OPEC+ decisions.

PVC prices are expected to remain soft, given the supply surplus and weak demand amid global economic slowdown, the management disclosed.

Hydrogen Peroxide and High-Temperature Direct Chlorination (HTDC) projects are expected to come online by Mar’24.

The major demand for PVC in Pakistan (~56%) comes from the pipes and fittings segment.

Courtesy – AHL Research