20000201

Engro declares 30pc drop in profit

RECORDER REPORT

KARACHI: Engro Chemicals Pakistan Limited profit fell by 30 percent to Rs 1.047 billion in the year ended December 31 1999 compared with the previous year's profit owing to increase in gas prices and dumping of imported urea in the market.

According to the information released by the Engro Chemicals after its board of directors meeting held on Monday to review the 1999 results, the company paid a total cash dividend of 60 percent as compared with 80 percent and 20 percent bonus in 1998.

The company achieved record production and sale of fertilizers during 1999. However, the profitability of the company declined by 30 percent for the full year. The reduction in profit was attributed to the 60 percent increase in gas prices. The new rates were applicable from July-August 1999.

The dumping of imported urea in an oversupplied domestic market, also eroded the profits of the company. The levy of 10 percent regulatory duty by the new government towards the end of the year checked further erosion of the margin, but the industry remained appreciably weakened.

The company's two joint ventures made significant progress during 1999. Engro Asahi Polymer and Chemical Limited completed construction of its PVC resin plant of 100,000 tons capacity at Port Qasim.

The plant commenced production in November 1999, six weeks ahead of planned schedule. The PVC project was competed at a cost of $73.5 million , well below the budgeted cost of $83 million. Engro Paktank Terminal Limited completed construction of specialised storage tanks to handle Vinyl Chloride Monomer, Acylonitrile and LPG at a cost of $16.5 million. While the first two facilities were made operational, the LPG facility remained idle due to a dispute with the government on the applicable product-handling tariff. An early resolution is expected, the company said.