LAHOE - Dawood Hercules (DAWH) was the worst affected by severe gas shortage at SNGPL network, with its supply curtailed by over 50 per cent during the year. The company has reported bottom line of Rs 2,893 million for CY11, recording a YoY decline of 11 per cent.
Resultantly, the portion of earnings contributed by its core fertilizer operations reported a loss of Rs88 million.
DAWH’s sales declined by 28 per cent to Rs6,309 million in CY11 due to 53 per cent drop in urea volumetric sales. Whereas hikes in urea prices by 36 per cent restricted the decline of net turnover. Net revenue from sales of imported DAP clocked in at Rs1,871 million. The company’s DAP trading margins dropped by hefty 700bps to just 5 per cent due to high international prices.
DAWH’s finance costs declined by 11 per cent in absence of short term borrowing.
The company was required to make a bullet repayment of its Rs5.7 billion Musharaka. Due to cash flow constraints arising from lower production, DAWH successfully replaced the Musharaka arrangement in CY11 with Rs4.8 billion Diminishing Musharaka, to be repaid in six semi annual installments starting in CY14, thus alleviating any medium term debt obligation concerns.
Profit from DAWH’s 38.13 per cent holding of Engro Corp. (ENGRO) grew by hefty 52 per cent to PKR2,981 million (PKR6.2/sh), effectively netting the impact of loss from DH Fertilizers. Experts expect significant growth in ENGRO going forward stemming from the company’s foods and polymer businesses, which shall bode well for DAWH.
DAWH booked impairment loss of Rs587 million from decline in market value of SNGPL, which had fallen by 33 per cent during the year. Experts expect the loss to significantly reverse going forward, since SNGPL’s market value has rebounded post Dec11.