KARACHI, Jan 22: Engro Chemical Pakistan on Monday announced profit after tax (PAT) at Rs2.55 billion for the financial year ended December 31, 2006.

Most analysts thought that though sales stood slightly lower, earnings were in line or better than expected and the price of the company stock rose by Rs1.10 to close at Rs180.10 in trading in 4.3 million shares at the Karachi Stock Exchange.

In a statement the company said that the PAT was ‘a new record’ and that it reflected 10 per cent increase over the profit at Rs2.32 billion for the previous year. The higher profit was stated to be principally due to higher urea volumes because of better production and capital gains of Rs131 million on sale of land to Engro Asahi.

The company stated that Engro Urea production in 2006 was 969,000 tons, representing increase of 6 per cent over 2005. The Engro Urea sales of 945,000 tons registered a 6 per cent increase over 2005 volume of 890,000 tons. Engro's market share for the year in review remained at 19 per cent.

Engro observed that the year under review proved to be a challenging year for ‘Zarkhez’ as its sales declined by 33 per cent to 77,000 tons against last year’s sales of 115,000 tons mainly due to the decline in acreage of important target crops and a change in strategy to focus more on value-added crops.

Overall phosphate sales volume stood at 388,000 tons. The share of phosphate market for 2006 was 23 per cent.

Sales for the year stood at Rs17.6 billion, which was lower by 4 per cent over the previous year. The drop was attributed to decline in Zarkhez sales.

Subsidiaries and affiliates were also stated to have performed well with record profit contributions from Engro Asahi, Engro Vopak, and Engro Innovative while Engro Foods' loss was said to be ‘lower than planned’. The company stated that during 2006, Engro's major diversification / growth initiatives were realised, which included the following: Gas allocation to setup a new urea plant at an estimated cost of $950m; launch of Engro Asahi's back integration project at an estimated cost of $220m; approval by PPIB of Engro Energy's IPP costing approx. $220m; commencement of Engro Foods commercial operations and start of work on their second plant; acquisition of US based automation company by Engro Innovative and launch of Engro Vopak's ethylene storage project costing approx. $30 million.

The company observed that over the next three years, Engro, its affiliates and subsidiaries would invest over $1.5 billion in these projects.