Jawad Ahmed ISLAMABAD, June 07 (INP-WealthPK): Engro Polymer and Chemicals Limited (EPCL) recorded revenue of Rs. 23.127 billion in the first quarter (January-March) of the calendar year 2022, indicating an increase of 48% compared to Rs. 15.671 billion in the same period of last year on the back of higher volumetric sales. During this quarter, the company declared a profit-after-tax of Rs4.714 billion against Rs4.14 billion in the last year’s quarter, indicating 13.78% growth. Quarterly Results During the first quarter of 2022, the company's basic earnings per share were Rs. 5.19 compared to Rs4.56 in the previous year's quarter. Founded in 1997, the company is a subsidiary of Engro Corporation Limited (the holding company), which is a subsidiary of Dawood Hercules Corporation Limited (the ultimate parent company). The principal activity of the company is to produce and market chlorovinyl products, which include polyvinyl chloride (PVC), vinyl chloride monomer (VCM), caustic soda liquid, caustic soda flakes, hydrochloric acid and sodium hypochlorite. The company’s flagship brand ‘SABZ’ has become synonymous to quality PVC in the country. Pattern of shareholding As of December 31, 2021, over 67% of the company's shares were owned by affiliated entities and associated parties. Its holding company – Engro Corporation Limited – owned 83.5% of the total shares held in this category. The general public (local) owned 16.13% of the shares. Mutual funds owned 8.12% of the company's stock, while insurance companies owned 3.53% shares. "Others" owned 3.05% of the stock. The board of directors, the chief executive officer, their spouses and minor children owned a negligible percentage of the company's equity. Company Turnover The company's top line climbed by 27% year-on-year to Rs35.27 billion in 2018, up from Rs27.73 billion in 2017. The reason for this big sales volume was PVC selling thanks to the company's solid presence in the domestic market and the market's optimistic expansion. Strong international vinyl chain dynamics also contributed to the increase in sales volume. The company’s cost of sales increased by Rs4.87 billion (22% year-on-year) owing to increase in production quantities. Another reason in cost of sales can be attributed to the increase in natural gas price by 30% during last months of 2018. [caption id="attachment_68031" align="aligncenter" width="696"] Source: Company Annual Report/ WealthPK Research[/caption] In 2019, the company’s top line increased 7.27% year-on-year to Rs37.84 billion. During the year, cost of sales increased by Rs2 billion owing primarily to increase in natural gas prices by 31%. However, the net impact of favourable exchange rate and lowered raw material prices partly offset the increase in gas prices. The gross profit margin relies on international PVC and ethylene prices, gas prices and currency fluctuations. Despite the varying behaviour of these variables, the company managed to increase gross profit by Rs497 million. [caption id="attachment_68030" align="aligncenter" width="696"] Source: Company Annual Report/WealthPK Research[/caption] However, in 2020, the company's sales decreased by 7% to Rs35.33 billion because of the Covid-19-induced lockdowns. The gross and net profitability for the year, however, improved by 35% and 55%, respectively. Net profit grew to Rs5.73 billion from Rs3.70 billion the previous year. Profitability improved due to a significant rise in international prices and cost controlling measures implemented. The company recorded an Rs.450 million post-tax gain on remeasurement of GIDC provision. [caption id="attachment_68029" align="aligncenter" width="696"] Source: Company Annual Report/ WealthPK Research[/caption] In 2021, the revenues almost doubled to Rs70 billion with net profit increasing by 163% to Rs15 billion. This was on account of an increase in PVC prices and substantially higher sales volumes against an expansion in the company’s production capacities since the commencement of the PVC-III and VCM debottlenecking project during the year.