Engro Corporation Limited

Full Year- 2010 Business Results
Security Analyst Briefing February 15, 2011

YTD December - 2010 Business Results Security Analyst Briefing

Financial Highlights
Revenue
Rs. Million
Engro Fertilizers Ltd Engro Foods Limited Engro Polymer & Chemicals Limited Engro Energy/Engro Powergen Engro Eximp Private Limited Engro Vopak Terminal Limited Avanceon Limited Engro Corporation (Consolidated)

Profit After Tax
Full year Rs. Million 2009

(based on 100%)

Full year 2010

Full year 2010

Full year 2009

19,018 21,050 14,618 5,727 17,720 2,303 1,828 79,976

16,231 14,665 11,632 10,522 2,136 1,615 58,152

Engro Fertilizers Ltd Engro Foods Limited Engro Polymer & Chemicals Limited Engro Energy/Engro Powergen Engro Eximp Private Limited Engro Vopak Terminal Limited Avanceon Limited Engro Corporation (Consolidated)*

3,730 177 (770) 1,100 1,732 1,109 (195) 6,790

2,351 (435) (194) 1,451 917 24 3,807

Full Year 2010 Business Results Security Analyst Briefing

*Engro Share

107 2.719 2.068 1.834 3.Engro’s Performance Rs.976 Revenues 1990 2004 2006 2007 2009 2010 PAT 134 1.152 79. Million 13.240 34.121 58.790 Full Year 2010 Business Results Security Analyst Briefing .807 6.277 20.

2010 Business Results Security Analyst Briefing .Fertilizer Business YTD December .

810/bag. the industry gave benefit of Rs. fourth quarter demand turned out to be better than what was expected in third quarter Average selling price of domestic Urea during 2010 was Rs.640/bag (C&F USD 340/ton) By maintaining domestic Urea prices significantly lower than international prices.UREA Market Environment Pakistan’s urea industry declined by 5% in the past year to 6. 1. while average landed cost of imported Urea was Rs. 64 billion in 2010 to the Farmer fraternity Total Benefit to Farmer .Rs. However. 104 bn Govt Contribution (Differential of Feed and Fuel gas prices.2 million in 2010 from 6. net of taxes paid) Direct subsidy • 23 • 64 17 Fertilizer producers' contribution Full Year 2010 Business Results Security Analyst Briefing . after facing the worst ever floods in the country’s history.5 million tons in 2009.

20 Cost to Farmers Full Year 2010 Business Results Security Analyst Briefing . Billion Costing the national economy by importing more expensive urea and providing subsidy for the same – impact of ~ Rs. 17 billion for 2011. 20 billion /annum on domestic urea production 17 Cost to Economy Impact of Gas Curtailment – Rs.UREA Market Environment The gas curtailment regime of the government has seriously impacted the agricultural economy of Pakistan by Increasing the cost of inputs to the farmers – impact of ~ Rs.

DAP price (C&F Karachi) during December was USD 633/ton (Black Sea) Full Year 2010 Business Results Security Analyst Briefing .4Mn tons from 1. 995kT in 2009.8Mn tons in 2009 due to floods and high international and domestic prices After a depressing 2nd quarter the sales started to pick up in the third quarter and peaked in the last quarter Total Phosphate imports during 2010 were 679 kT vs.Phosphates Market Environment The phosphate fertilizer demand in Pakistan declined to 1.

Domestic Supply = 638 Kt Full Year 2010 Business Results Security Analyst Briefing . Domestic Supply = 5.Industry Demand and Market Shares Market Share .Phosphates 1% 5% 3% 1% 49% 15% 23% 50% DH AgriTech FFC & FFBL NFML Engro Pak Arab RG AgriTech FFC & FFBL DH Engro Pvt Importers Total Market * Estimated Urea = 6.Urea 6% 16% 7% 22% Market Share .2 MT Phosphates = 1405 Kt.2 MT.

1.Business Highlights Urea In 2010. in line with a decline in the phosphate market Engro Fertilizers’ net profit for the year 2010. as compared to a total of 92 kT tons produced during 2009 Although demand for potash remained healthy throughout 2010 . 101 kT in 2009 Zarkhez plant produced a total of 100 kT of blended fertilizers. an unprecedented hike.020/bag . as well as no planned turnaround during the year The company sold 971 kT of urea Vs 958 kT in 2009 Price of Engro-Urea was increased by Rs. 574 million ( gain on sale of land & tax reversal) Full Year 2010 Business Results Security Analyst Briefing . 190/bag on December 24 to Rs. in response to announced gas curtailment & load management Zarkhez Sales for the year stood at 95 kT vs. the NP industry declined by 17% compared to 2009. which is 2% higher than the 952 kT produced in 2009 The gas curtailment impact was offset by a record production in the first half. 3.730 million including one time earnings of Rs. which includes 63 kT of Zarkhez and 37 kT of E-NP. the company produced 972 kT of urea. was Rs.

3 Million tons Estimated Forex Saving USD 500Mn/year Total Man Hours : 50 million EnVen Full Year 2010 Business Results Security Analyst Briefing en en 1.1 bn Trial Production: December 29th Capacity: 1. 2011. as part of a gas load management program The company expects to receive gas by the end of February.3 . the company achieved mechanical completion and started trial production of its urea expansion project at Daharki which is the worlds largest single train ammonia-urea plant It is the largest private sector industrial investment in Pakistan The plant was unable to continue operations as SNGPL commenced a 45-day gas outage on January 7. commercial production is expected soon after the plant is stabilized Investment USD 1.Fertilizer Expansion Project In 2010.

854 million vs. 277kT in 2009 Outlook With the new urea expansion coming online. With the reduced supply there is again a shortage of urea in the country and hence the company does not foresee any issues with selling its entire production Engro Fertilizers listing is planned during 2011 Full Year 2010 Business Results Security Analyst Briefing . against firm contracts. installed urea production capacity allows the country to become self-sufficient in urea Gas curtailment. against 357 kT in 2009 Net profit for the business stood at Rs. 1.Business Highlights(Contd. 1. Rs.262 million in 2009 signifying an increase of over 47% Higher margins due to increasing international price Engro Phosphate imports during year were 324 kT vs. will affect the production negatively thus the company has increased urea price by PKR190 per bag (23%).) Purchased Products (Phosphates) The business sold 327 kT of phosphates in 2010.

2010 Business Results Security Analyst Briefing .Foods Business YTD December .

21 billion Foods Business posted a Profit of Rs 171 million as opposed to a loss of Rs (435) million in 2009 The company achieved volume growth of 27% during 2010 increasing its volumes to 309 million liters from 243 million liters in 2009 in UHT Tarang volumes grew by 47% to 169 million liters and maintained its leadership in tea creamers with segment share of 62% Olpers grew by 9% to 137 million liters achieving a market share of 39%in the all-purpose milk segment. which was almost stagnant in 2010 Omore volumes increased by 100% to 12.500 liters per day.Business Highlights During 2010. and Omore market share was estimated at 17% during 2010 The company’s Nara Diary Farm is currently producing 21. foods business revenues grew by more than 43% to above Rs. with a total herd size of 2.269 are milking Full Year 2010 Business Results Security Analyst Briefing .2 million liters in 2010from 6.591 animals of which 1.1 million liters in 2009.

Business Highlights (Contd. Engro Eximp successfully built relationships with premium buyers in international markets. and exported 5. This will be foods’ first international venture Listing of Engro Foods is planned during 2011 Full Year 2010 Business Results Security Analyst Briefing .000 tons of rice during the year Outlook The foods business will continue to increase its market share in the processed milk and ice cream segments with ice cream business increasing its geographical reach 2011 will also see the beginning of sales from its own rice processing plant Foods is entering the Halal food business in America and Canada through its planned acquisition of ‘Al Safa Halal’ (subject to regulatory approvals). Commercial production of milling and parboiling facilities is expected in March 2011 In the rice trading business.) The rice Plant started its drying operation in November 2010.

Petrochemicals Business YTD December .2010 Business Results Security Analyst Briefing .

000 tons as against 27. demand from agricultural sector and pipe exports to Afghanistan. However. Power load shedding and gas supply curtailment will continue to adversely affect demand Caustic Soda demand is expected to remain strong and the Company is expected to sell capacity Full Year 2010 Business Results Security Analyst Briefing . Caustic soda sales remained strong during the year and Company sold 80. PVC domestic sales volume declined to 97.000 tons in 2009. since stable operation of the VCM plant has been achieved the business has started improving its profitability The company produced 114. (770) million in 2010 primarily due to delay in VCM plant COD.000 tons in 2009 93.000 tons in 2009 Outlook: PVC domestic demand is expected to be stable to strong in 2011 on account of reconstruction activities in flood affected areas.000 tons of PVC as compared to 116.000 tons in 2010 from 119.000 tons of Caustic soda was produced as compared to 39.000 tons in 2009.Business Highlights The integrated facility became fully operational after the VCM plant achieved commercial operations in September 2010 Polymers business posted a loss of Rs.

2010 Business Results Security Analyst Briefing .Energy & Power Business YTD December .

3 MW) Total turnover for the company was Rs.Exchange loss of Rs.727 million The company posted a profit of Rs.Business Highlights The plant dispatched a total net power of 1. 294 million on embedded derivates was capitalized in consultation with the auditors During the first nine months of operations.100 million during 2010 . 5.201 GWh to the national grid during the year (Plant Capacity of 217. the plant demonstrated billable availability factor of 95% Outlook Based on current demand supply situation the Qadirpur power plant is expected to achieve very high dispatch rates Engro Powergen Qadirpur listing is planned during 2011 Full Year 2010 Business Results Security Analyst Briefing . 1.

the Sindh Engro Coal Mining Company Limited (SECMC) completed the detailed feasibility study (DFS) as per the target deadline.57 Billion ton – sufficient to produce 5.) In 2010. social and environmental viability of the Thar Coal Mining Project (Block II) Estimated Exploitable Coal Reserves of 1.Business Highlights (Contd. 2010 However economic viability cannot be ascertained without approval of Coal Pricing Mechanism and Infrastructure Projects by Government of Sindh / Government of Pakistan Full Year 2010 Business Results Security Analyst Briefing . confirming the technical.000 MW for 50 years Fiscal Incentives Package ( including guaranteed 20% IRR for Coal Mining & Power Projects ) was approved by ECC on Oct 15.

Engro Vopak Terminal Ltd.2010 Business Results Security Analyst Briefing . YTD December .

40 kT in 2009 Engro Vopak also achieved a first in the history of LPG imports in the country by handling the largest ship (5.000 tons) to dock in Pakistan Full Year 2010 Business Results Security Analyst Briefing . 1.063 kT in 2009.Business Highlights The Company completed 13 years of safe operations without lost work injury in November 2010 The company’s achieved its highest ever throughput for a year of 1. including LPG import of 31 kT vs.104 kT vs.

2010 Business Results Security Analyst Briefing .Avanceon YTD December .

a profit of Rs 35 million during the same period last year.Business Highlights Total revenues of Rs 1.6%) in 2009 to 6.828 million during 2010 vs. Sales in Pakistan and UAE declined due to macroeconomic slowdown Outsourced hours increased from 3.230 hrs (3.4%) in 2010 Full Year 2010 Business Results Security Analyst Briefing .614 in 2009 Avanceon Limited posted a consolidated loss of Rs (217) million vs. However US operations posted a profit of Rs. Rs 1. 72 million.443 hrs (9.

2010 Business Results Security Analyst Briefing .Engro Rupiya YTD December .

125 million.Highlights Achieved the target of Rs. 78% Rs. 3. 4 billion with individuals subscribing to almost 80% of the issue Subscription Breakup Corporates. 81 Institutions Engro Rupiya Certificate has been a successful alternate for the company to raise funds for its borrowing requirements from a previously untapped investor base Individuals. 2011 Full Year 2010 Business Results Security Analyst Briefing . 2. 22% Rs. 875 million.460 Investors Engro intends to develop Engro Rupiya as a long term source of funding for which it plans to offer subsequent TFC offerings with the 2nd issue in 2Q.

61. 2011.Corporate Social Responsibility Engro contributed over Rs. 58 million in 2009 Engro was also heavily involved in the relief and rehabilitation efforts following the floods during the summer of 2010(total budget Rs.136 million under its social investments commitment in 2010. The recipients were selected based on lifetime accomplishment and excellence in their respective fields and received a cash prize of PKR 5 Million each at an exclusive award ceremony Recipients of Engro Excellence Award 2011 Sir Syed award for Humanitarianism Ghalib award for Literature Dr Abdus Salam award for Applied Sciences Abdul Sattar Edhi and Edhi Foundation Mushtaq Ahmed Yusufi Dr Ataur Rahman Full Year 2010 Business Results Security Analyst Briefing . as compared to Rs.75m) Engro Corporation hosted the first Engro Excellence Awards in January.

2010 Business Results Security Analyst Briefing .Q&A Thank You YTD December .

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