KARACHI: Engro Corporation reported a loss of Rs340 million in the first half of 2012 (Jan-June), compared with a profit of Rs3,381 million in the same period last year as it is struggling with non-availability of gas, it said in a press statement on Thursday.

Engro Corp witnessed 16 per cent higher monetary sales year-on-year at Rs53.34 billion, compared with sales of Rs46.08 billion in first half of 2011. However an increase in cost of sales of 23 per cent to Rs40.5 billion in Jan-June 2012, compared with Rs33.04 billion in the corresponding period last year, mitigated the impact of improved sales.

Engro’s single-train urea ammonia plant worth $1.1 billion only operated for a month during the six months due to severely curtailed gas supply on the network which affected its bottom line earnings.

Urea imported by the government, which was sold below the market price also resulted in a decline in sales of 31 per cent for Engro as its sales were 397,000 tons in six months ended June 30, 2012 from 575,000 tons in first half of 2011.

This led the business to make a net loss of Rs1,731 million during Jan-July 2012, compared with a net profit of Rs2,175 million in the same period last year.

“The loss is directly attributable to decreased sales volume, lower margins, higher depreciation and the financial costs pertaining to post-commissioning of the new plant,” Engro said in its statement.

The outlook for gas supply does not look too optimistic either. Engro said due to massive gas suspension during the period, Engro Fertiliser’s cash flows are not sufficient for the principal payments due in the second half of 2012, therefore Engro has asked its lender to extend the tenure of financing.

“We believe until the company does not receive an uninterrupted gas supply (to its 1.2 million tons per annum Enven plant), going forward the situation will remain unchanged,” Summit Capital said in a note.

However, Engro Foods continued its rapid growth as its turnover increased 45 per cent to 19.8 million in the first half of 2012, compared with 13.7 million in the corresponding year last year, which resulted in a profit after tax of Rs1.02 billion, a growth of 368 per cent from Jan-June 2011.

Engro’s investment in the Halal Foods business in Canada had sales revenue of Canadian $5.7 million during Jan-July 2012.

Its petrochemicals business posted a net profit of Rs59 million for six months ended June 30, because of higher volumes and caustic prices, compared with a loss of Rs195 million in the first half of 2011.

Engro Qadirpur Powergen plant’s net profit was Rs1,065 million in the first half of 2012, compared with a net profit of 745 million in the same period last year, however the substantial rise in the receivable due to circular debt is a major concern for the business.

Engro Vopak Terminal Ltd, the chemical storage and handling business, posted a net profit of Rs673 million in Jan-June 2012, compared with Rs478 million in the corresponding period last year mainly due to the company moving from normal taxation to presumption taxation.