security analyst briefing - ytd dec-2010
TRANSCRIPT
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Full Year 2010 Business Results
Security Analyst Briefing
Financial Highlights
Revenue
Rs. MillionFull year
2010Full year
2009
Engro Fertilizers Ltd 19,018 16,231
Engro Foods Limited 21,050 14,665
Engro Polymer & ChemicalsLimited
14,618 11,632
Engro Energy/Engro Powergen 5,727 -
Engro Eximp Private Limited 17,720 10,522
Engro Vopak Terminal Limited 2,303 2,136
Avanceon Limited 1,828 1,615
Engro Corporation(Consolidated)
79,976 58,152
Profit After Tax (based on 100%)
Rs. MillionFull year
2010Full year
2009
Engro Fertilizers Ltd 3,730 2,351
Engro Foods Limited 177 (435)
Engro Polymer & ChemicalsLimited
(770) (194)
Engro Energy/Engro Powergen 1,100 -
Engro Eximp Private Limited 1,732 1,451
Engro Vopak Terminal Limited 1,109 917
Avanceon Limited (195) 24
Engro Corporation(Consolidated)*
6,790 3,807
*Engro Share
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Full Year 2010 Business Results
Security Analyst Briefing
Engros Performance
1,27713,068 20,240
34,12158,152
79,976
201020092007200620041990
134
1,719 2,107 2,834 3,8076,790
Revenues
PAT
Rs. Million
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YTD December - 2010 Business Results
Security Analyst Briefing
Fertilizer Business
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Full Year 2010 Business Results
Security Analyst Briefing
Average selling price of domesticUrea during 2010 was Rs. 810/bag,while average landed cost ofimported Urea was Rs. 1,640/bag(C&F USD 340/ton)
By maintaining domestic Urea pricessignificantly lower than internationalprices, the industry gave benefit ofRs. 64 billion in 2010 to the Farmer
fraternity
Pakistans urea industry declined by 5% in the past year to 6.2 million in 2010 from 6.5
million tons in 2009, after facing the worst ever floods in the countrys history. However,
fourth quarter demand turned out to be better than what was expected in third quarter
UREA Market Environment
23
1764
Total Benefit to Farmer - Rs. 104 bn
GovtContribution(Differential ofFeed and Fuelgas prices, netof taxes paid)
Direct subsidy
Fertilizerproducers'contribution
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Full Year 2010 Business Results
Security Analyst Briefing
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.
20 billion /annum on domestic urea production
Costing the national economy by importing more expensive
urea and providing subsidy for the same impact of ~ Rs. 17
billion for 2011.20
17
Impact of Gas Curtailment Rs. Billion
Cost to
Economy
Cost to
Farmers
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Full Year 2010 Business Results
Security Analyst Briefing
Phosphates Market Environment
The phosphate fertilizer demand in Pakistan declined to 1.4Mn tons from 1.8Mn
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. 995kT in 2009.
DAP price (C&F Karachi) during December was USD 633/ton (Black Sea)
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Full Year 2010 Business Results
Security Analyst Briefing
Industry Demand and Market Shares
Total Market Urea = 6.2 MT; Domestic Supply = 5.2 MT
Phosphates = 1405 Kt; Domestic Supply = 638 Kt
7%
49%
15%
5%
16%
6%
Market Share - Urea
DH FFC & FFBL Engro
AgriTech NFML Pak Arab
1%
50%
23%
1%3%
22%
Market Share - Phosphates
RG FFC & FFBL Engro
AgriTech DH Pvt Importers
* Estimated
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Full Year 2010 Business Results
Security Analyst Briefing
Business HighlightsUrea
In 2010, the company produced 972 kT of urea, 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, 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. 190/bag on December 24 to Rs. 1,020/bag , an unprecedented
hike, in response to announced gas curtailment & load management
Zarkhez
Sales for the year stood at 95 kT vs. 101 kT in 2009
Zarkhez plant produced a total of 100 kT of blended fertilizers, which includes 63 kT of Zarkhez and 37 kT
of E-NP, as compared to a total of 92 kT tons produced during 2009
Although demand for potash remained healthy throughout 2010 , the NP industry declined by 17%
compared to 2009, in line with a decline in the phosphate market
Engro Fertilizers net profit for the year 2010, was Rs. 3,730 million including one timeearnings of Rs. 574 million ( gain on sale of land & tax reversal)
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Full Year 2010 Business Results
Security Analyst Briefing
Fertilizer Expansion Project
The plant was unable to continue
operations as SNGPL commenced a
45-day gas outage on January 7,
2011, as part of a gas load
management program
The company expects to receive gas
by the end of February, commercial
production is expected soon after
the plant is stabilized
en en 1.3en en 1.3
EnVenInvestmentUSD 1.1 bn
Capacity: 1.3Million tons
EstimatedForex Saving
USD500Mn/year Total ManHours : 50
million
TrialProduction:December
29th
In 2010, 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
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Full Year 2010 Business Results
Security Analyst Briefing
Business Highlights(Contd.)
Purchased Products (Phosphates) The business sold 327 kT of phosphates in 2010, against 357 kT in 2009
Net profit for the business stood at Rs. 1,854 million vs. Rs. 1,262 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. 277kT in 2009
Outlook
With the new urea expansion coming online, installed urea production capacity allows the country to
become self-sufficient in urea
Gas curtailment, against firm contracts, will affect the production negatively thus the company has
increased urea price by PKR190 per bag (23%).
With the reduced supply there is again a shortage of urea in the country and hence the company does notforesee any issues with selling its entire production
Engro Fertilizers listing is planned during 2011
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YTD December - 2010 Business Results
Security Analyst Briefing
Foods Business
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Full Year 2010 Business Results
Security Analyst Briefing
Business Highlights
During 2010, foods business revenues grew by more than 43% to above Rs. 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 12.2 million liters in 2010from 6.1 million liters in 2009,
and Omore market share was estimated at 17% during 2010
The companys Nara Diary Farm is currently producing 21,500 liters per day, with a total herd
size of 2,591 animals of which 1,269 are milking
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Full Year 2010 Business Results
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Business Highlights (Contd.)
The rice Plant started its drying operation in November 2010. Commercial production ofmilling and parboiling facilities is expected in March 2011
In the rice trading business, Engro Eximp successfully built relationships with premium
buyers in international markets, and exported 5,000 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). This will be foods first
international venture
Listing of Engro Foods is planned during 2011
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YTD December - 2010 Business Results
Security Analyst Briefing
Petrochemicals Business
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Full Year 2010 Business Results
Security Analyst Briefing
Business Highlights
The integrated facility became fully operational after the VCM plant achieved commercialoperations in September 2010
Polymers business posted a loss of Rs. (770) million in 2010 primarily due to delay in VCM plant COD.
However, since stable operation of the VCM plant has been achieved the business has started
improving its profitability
The company produced 114,000 tons of PVC as compared to 116,000 tons in 2009. PVC domestic
sales volume declined to 97,000 tons in 2010 from 119,000 tons in 2009
93,000 tons of Caustic soda was produced as compared to 39,000 tons in 2009. Caustic soda sales
remained strong during the year and Company sold 80,000 tons as against 27,000 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, demand from agricultural sector and pipe exports to Afghanistan.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
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Energy & Power Business
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Full Year 2010 Business Results
Security Analyst Briefing
Business Highlights
The plant dispatched a total net power of 1,201 GWh to the national grid during the year
(Plant Capacity of 217.3 MW)
Total turnover for the company was Rs. 5,727 million
The company posted a profit of Rs. 1,100 million during 2010
- Exchange loss of Rs. 294 million on embedded derivates was capitalized in consultation with the auditors
During the first nine months of operations, 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
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Full Year 2010 Business Results
Security Analyst Briefing
Business Highlights (Contd.)
In 2010, the Sindh Engro Coal Mining Company Limited (SECMC) completed the detailedfeasibility study (DFS) as per the target deadline, confirming the technical, social and
environmental viability of the Thar Coal Mining Project (Block II)
Estimated Exploitable Coal Reserves of 1.57 Billion ton sufficient to produce 5,000 MW for
50 years
Fiscal Incentives Package ( including guaranteed 20% IRR for Coal Mining & Power Projects )
was approved by ECC on Oct 15, 2010
However economic viability cannot be ascertained without approval of Coal PricingMechanism and Infrastructure Projects by Government of Sindh / Government of Pakistan
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Engro Vopak Terminal Ltd.
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Full Year 2010 Business Results
Security Analyst Briefing
Business Highlights
The Company completed 13 years of safe operations without lost work
injury in November 2010
The companys achieved its highest ever throughput for a year of 1,104 kT
vs. 1,063 kT in 2009, including LPG import of 31 kT vs. 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
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YTD December - 2010 Business Results
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Avanceon
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Full Year 2010 Business Results
Security Analyst Briefing
Business Highlights
Total revenues of Rs 1,828 million during 2010 vs. Rs 1,614 in 2009
Avanceon Limited posted a consolidated loss of Rs (217) million vs. a profit of Rs 35
million during the same period last year. However US operations posted a profit of
Rs. 72 million.
Sales in Pakistan and UAE declined due to macroeconomic slowdown
Outsourced hours increased from 3,230 hrs (3.6%) in 2009 to 6,443 hrs (9.4%) in
2010
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Security Analyst Briefing
Engro Rupiya
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Full Year 2010 Business Results
Security Analyst Briefing
Highlights
Achieved the target of Rs. 4 billion withindividuals subscribing to almost 80% of the
issue
Engro Rupiya Certificate has been a successful
alternate for the company to raise funds for its
borrowing requirements from a previously
untapped investor base
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, 2011
Corporates,22%
Individuals,
78%
Subscription Breakup
Rs. 3,125 million,2,460 Investors
Rs. 875 million,81 Institutions
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Full Year 2010 Business Results
Security Analyst Briefing
Corporate Social Responsibility Engro contributed over Rs.136 million under its social investments commitment in 2010, as
compared to 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. 61.75m)
Engro Corporation hosted the first Engro Excellence Awards in January, 2011. 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 Abdul Sattar Edhi and Edhi Foundation
Ghalib award for Literature Mushtaq Ahmed Yusufi
Dr Abdus Salam award for AppliedSciences
Dr Ataur Rahman
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YTD December - 2010 Business Results
Security Analyst Briefing
Q & A
Thank You