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Engro Security Analyst Briefing 1st Quarter 2011
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Engro Security Analyst Briefing 1st Quarter 2011

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  • 1. Security Analyst Briefing YTD March - 2011
  • 2. Financial Highlights Revenue PATRs. Million YTD March YTD March Rs. Million YTD March YTD March 2011 2010 2011 2010Engro Fertilizers 5,882 4,620 Engro Fertilizers 1,397 773Engro Foods 6,431 4,741 Engro Foods 117 (15)Engro Polymer 4,124 3,284 Engro Polymer (59) (154)Engro Powergen 1,844 107 Engro Powergen 345 47Engro Eximp 3,173 3,768 Engro Eximp 164 897Engro Vopak 494 532 Engro Vopak 239 265AVANCEON 370 340 AVANCEON (9) (64)Engro Corporation 21,848 16,859 Engro Corporation 2,054 1,889(Consolidated*) (Consolidated*) * Engro Share Security Analyst Briefing YTD March - 2011
  • 3. Fertilizer Business Security Analyst Briefing 1st Quarter - 2011
  • 4. Urea Market Environment Market size for urea, during the 1Q 2011 was 1.2 million tons, a decline of 14% over the same period last year (1.4 million tons). Major reason for the decline was shortage of product due to gas curtailment. Domestic production estimated at 1.1 million tons was 8% lower as compared to 1.2 million tons during the same period last year on account of gas curtailment as well as extended winter gas load shedding. Average selling price of domestic Urea during 1Q 2011 was Rs. 999/bag (Excluding impact of Total Benefit to Farmer - Rs. 20bn GST), while average landed cost of imported Govt Contribution Urea was Rs. 1,940/bag (C&F USD 400/ton) 3 (Differential of Feed and Fuel gas prices, net of taxes paid) By maintaining domestic Urea prices significantly lower than international prices, Fertilizer producers contribution the industry gave benefit of Rs. 17 billion in 1Q 17 2011 to the farmer fraternity Security Analyst Briefing YTD March - 2011
  • 5. Phosphates Market Environment Phosphates demand in Pakistan declined to 174kT from 216 kT in 1Q, 2010 - Decline is due to higher international prices (USD 600/Met 1Q, 2011 Vs. USD 365/Met in 1Q, 2010) Total Phosphate imports during 1Q 2011 were 49kT vs. 120kT in 2010 DAP price (C&F Karachi) during March was USD 680/ton (North Africa) Security Analyst Briefing YTD March - 2011
  • 6. Industry Demand and Market Shares Urea Market Share 2% 10% 4% 20% 50% 14% FFC and FFBL NFML Engro DH Pak Arab Agri Tech Total Market (1) Sales Domestic SupplyUrea 1.2 MT 1.1 MTPhosphates 174 kT 118 kT(1) Urea and Phosphates numbers are estimates and final Security Analyst Briefingnumbers will be confirmed once communicated by NFDC. YTD March - 2011
  • 7. Business HighlightsUrea: Revenue from urea sales was Rs. 4.5 billion vs. Rs. 3.8 billion last year – an increase of 18% - Increase in revenue is attributable to price increase because of gas curtailment and load management Due to gas curtailment urea production was 232kT vs. 257kT achieved in 1Q2010 – a decrease of 10% As a result of lower industry in 1Q 2011, Engro’s urea market share improved to 21% from 18% last year PAT from urea was Rs. 1,245 million vs. Rs. 725 million in 1Q2010 – impact of price increase due to load managementZarkhez Revenue from Zarkhez was Rs. 1,325 million vs. Rs. 780 million last year – due to higher raw material prices Against production of 28kT (26kT in 1Q10) sales were 29 kT vs. 21 kT during the same period last year. ⁻ Increase is attributable to focused marketing of the product as well as demand substitution due to rising phosphate prices(shortage of phosphates in face of rising demand). PAT was Rs. 144mn vs. Rs. 75mn earned in 1Q2010 – mainly due to inventory gains and higher volumes Security Analyst Briefing YTD March - 2011
  • 8. Business Highlights – cont.Purchased Products (Phosphates) Revenue from purchased products was Rs. 3 billion as compared to Rs. 3.6 billion last year primarily due to lower volumes Engro imported 49kT (100% import share) of Phosphates during 1Q 2011 vs. 120 kT in 1Q, 2010 Phosphates sales were 49 kT in 1Q 2011 (27% market share) vs. 78 kT in 1Q, 2010 PAT was Rs. 210 million as compared to Rs. 923 million earned in 1Q, 2010 - due to windfall trading gains in 2010Outlook Gas supply scenario remains volatile with fertilizer plants on Sui networks subjected to unprecedented gas load shedding in winter months. Shortfall of 700 kT is expected in Urea supply – Cost to GoP, in form of subsidy, will be ~Rs 10 billion Security Analyst Briefing YTD March - 2011
  • 9. Fertilizer Expansion Project en en 1.3 Due to the extended outage and intermittent gas supply, commissioning activity at the new fertilizer plant was hampered and delayed Engro has filed a case, in the Honorable High Court of Sindh, against the suspension of gas supply Court has restrained SNGPL from disconnecting the current supply of 80 MMSCFD of gas and directed that efforts to be made to provide the maximum amount of gas (100 MMSCFD) as committed The new plant is expected to achieve commercial production in 2nd quarter, 2011. Security Analyst Briefing YTD March - 2011
  • 10. Foods Business Security Analyst Briefing 1st Quarter - 2011
  • 11. Business Highlights Foods business revenue was Rs. 6.4 billion vs. Rs. 4.7 billion last year – an increase of 36% Foods posted a Profit of Rs 117 million as opposed to a loss of Rs. (15) million in the corresponding period last year – more than 70% growth in dairy business profitability i.e. Rs. 270 million vs. Rs. 157 million for the corresponding period last year UHT sales were up by 19% vs. the same period in 2010, driven largely by the growth of Tarang - Olpers volumes were 375 klpd vs. 362 klpd last year – an increase of 4% - Tarang volumes were 567 klpd vs. 424 klpd last year – an increase of 34% Foods retained market leadership in UHT with a market share of 37% Omorè has achieved volume growth of 72% YoY with total sales of 3,124 klitres vs. 1,821 klitres in 1Q 2010 – Revenue from ice cream was Rs. 438 million vs. Rs. 223 million last year. Dairy farm produced 21 klitres per day in 1st quarter 2011. Revenue earned was Rs. 90 million vs. Rs. 73 million in 1Q 2010. Security Analyst Briefing YTD March - 2011
  • 12. Business Highlights – cont. Launches and geographical expansions: ⁻ Omore was launched in Karachi, continuing its geographical expansion towards achieving a higher market share. ⁻ Olfrute Juices & Nectars were re-launched during the period, with new packaging and additional flavors. ⁻ New flavors of Owsum milk were also added to the portfolio during 1Q 2011. ⁻ Olpers Lite was launched in 200ml and 1000ml SKUsRice During the 1st quarter, 2011, Rice business revenues grew by 58% to Rs. 112m vs. Rs. 71m in the corresponding period last year Exported 1.5 kT of rice to premium customers in Europe and Middle East during the quarter, as compared to 1 kT in the same period last year - Additional commitments of 8 kT sales have also been made The rice processing facility, owned and operated by Engro Foods Supply Chain, will be fully operational during the second quarter of the year. Security Analyst Briefing YTD March - 2011
  • 13. Business Highlights – cont.Al-Safa Acquisition: During January 2011, Engro Corporation signed an agreement with Al-Safa Halal to purchase its halal food business in North America The business will be managed by Engro Foods and shares will be transferred to Engro Foods once regulatory approval is received.Outlook Sustained growth in the foods business is expected However, Revised General Sales Tax (RGST) on milk will remain a key risk to dairy segment outlook, although RGST is not expected to have any impact on rice, ice cream and juices segments. Security Analyst Briefing YTD March - 2011
  • 14. Petrochemicals Business Security Analyst Briefing 1st Quarter - 2011
  • 15. Business Highlights Revenue for the quarter was Rs. 4.1 billion, showing PVC - kT 29 an increase of 25% over Rs. 3.3 billion earned in the 24 corresponding period last year. 22 20 1Q, 2011 Growth is attributable to increased sales volumes and 1Q, 2010 higher product prices as compared to the same period last year. Sales Production Import of PVC resin in the country declined during the quarter as compared to 1Q 2010 mainly because Caustic - kT of increased supplies by the company. 22 20 19 17 VCM production was 14 kT as compared to 2 kT 1Q, 2011 during the corresponding period last year 1Q, 2010 Sales Production Security Analyst Briefing YTD March - 2011
  • 16. Business Highlights – cont. Polymer incurred a loss of Rs. (59) million compared to a loss of Rs. (154) million during the same period last year - The loss was primarily due to decreased production as a result of plant turnaround.Outlook PVC prices are expected to remain high with strong domestic demand from the agricultural and construction sector as well as exports to Afghanistan. The business’s margins are expected to improve as the integrated facility continues smooth operations Security Analyst Briefing YTD March - 2011
  • 17. Energy and Power Business Security Analyst Briefing 1st Quarter - 2011
  • 18. Business HighlightsQadirpur Total turnover for the company was Rs. 1,844 million vs. Rs. 107 million in 1Q, 2010 Qadirpur dispatched 99.6% of its installed capacity(217 MW) to the national grid during the first quarter of 2011 The plant underwent its first planned outage, which was safely completed as scheduled. Engro Powergen Qadirpur posted a profit of Rs. 349 million, as compared to a loss of Rs. (49) million in 1Q, 2010.Outlook Business will continue to focus on performance improvement at its power plant in Qadirpur to ensure reliability and availability to the national grid. Continue progress on Thar coal project Security Analyst Briefing YTD March - 2011
  • 19. Chemical Storage & Terminal Business Security Analyst Briefing 1st Quarter - 2011
  • 20. Business Highlights Engro Vopak Terminal Limited had smooth operations in the quarter - Total Revenue was Rs. 494 million vs. Rs. 532 million in 1Q, 2010. Volumes during the first quarter of this year were 225 MT vs. 259 MT in 1Q2010 - lower volumes of phosphoric acid and LPG Vopak posted a profit of Rs 239 million, as compared to a profit of Rs. 264 million during the same period last year. Hearing on CCP show cause notice was held on April 14, 2011 Security Analyst Briefing YTD March - 2011
  • 21. Automation Business Security Analyst Briefing 1st Quarter - 2011
  • 22. Business Highlights International Execution – During 1Q2011, company’s revenue increased by No of Hours 9% to Rs. 370 million in from Rs. 340 million in 3,431 1Q 2010 2,713 16% 11% Outsourcing engine is delivering as per the expectations – outsourced hours increased by 26% The loss for the period was Rs (9)million as 1Q, 2011 1Q, 2010 compared to the loss of Rs. (64) million during the corresponding period last year Security Analyst Briefing YTD March - 2011
  • 23. Q&AThank You Security Analyst Briefing 1st Quarter - 2011