KARACHI, Feb 16: Engro Corporation announced earnings and appropriations for the year ended Dec 31, 2011, on Thursday, which brought cheer to the market.

The surprise bonus of 30 per cent alongside the cash dividend at Rs2 per share (cumulative payout at Rs6 per share) were received warmly by the market, pushing the overall trading volume of the market to over 200 million shares for the day.

“Despite the company’s ongoing problems relating to gas supply to new plant (Enven), directors did not loose sight of the shareholders’ interest, which is to be appreciated,” said a shareholder.

But besides the fact of an impressive payout, the commendable point was the Engro’s successful policy of following ‘code of corporate governance’ to the letter, witnessed by fact that until the announcement of the results by the board, no one had a clue to what was about to come.

There was even some concern of a company asking shareholders for cash in rights. All of that had kept the Engro Corporation stock in the red by around Rs2.50 for much of the day. But in flash following the announcement by the board, the stock turned full circle to the North and closed at the upper circuit (maximum rise of 5 per cent in price allowed for a day), gaining Rs6.08 to close at Rs127.85.

Unlike many companies where the stock values begin to edge higher or lower in tune with the upcoming results, Engro had quiet clearly kept the appropriations as a closely guarded secret preventing leakage of the material information.

Now for the results: The company announced profit-after-tax (PAT) at Rs8.1 billion, translating to per share earnings (eps) at Rs20.50, up 19 per cent over the previous year’s PAT at Rs6.8 billion and eps at Rs17.26.

In a statement with the accounts, directors said that the profit for the year was “highest ever.”The consolidated revenue stood at Rs114.6 billion for the year ended December 31, 2011 compared to Rs79.9 billion in 2010.

Discussing the segment-wise results, the urea demand was said to have declined to 5.9m tons (from 6.1m in 2010) due to reduced supply on account of severe gas shortage.

With Engro expansion project (Enven’s) commissioning, the business produced 1,279,000 tons of urea and sold 1,263,000 tons, achieving a market share of 21pc.

The Fertiliser manufacturing and trading businesses achieved a total profit of Rs6,251 million during 2011, a 12pc growth over the year 2010. In the ‘Foods’ sector, market share of 44 per cent was secured as opposed to 39 per cent in 2010.

During the first half of the year, the foods business raised Rs1.2 billion by issuing 48 million shares to the institutional investors – mainly the US & UK mutual funds – and local investors. The shares were issued at a price of Rs25 per share. Mirroring its success in the local market, the business made its foray in the international arena with acquisition of Al-Safa – a leading halal meat brand in North America – at a total cost of $6.3m in April 2011. The foods business earned PAT of Rs891m during 2011 as compared to Rs177m during 2011.

The energy business recorded its highest dispatch of total net power of 1,657 GWh to the national grid as compared to 1,201 GWh in 2010.

The technical, environment, social and economic feasibility for the Thar Coal project was completed as per the target deadline. The business declared PAT of Rs1,718 million as compared to 1, 111 million in the year 2010. The near term outlook and challenges for fertiliser business was stated to be continuation of the gas curtailment, resulting in decreased production.

The implementation of the Gas Infrastructure Development Cess Tax reduced the feed gas subsidy from Rs345 per bag to Rs260 per bag, also increasing the input price of the gas from Rs103 per mmbtu to Rs313 per mmbtu – an increase of over 200 per cent. The company said that the increase in input costs, coupled with the continuing gas curtailment, was expected to build inflationary pressures on the supply price of urea in the local market.