KARACHI (January 28 2004): Engro Chemical is to announce net profit ranging from Rs 1.356 billion to Rs 1.400 billion in 2003, showing a gain of nearly 20 percent over preceding year because of higher sales.

Humaira Zaheer, head of research from Capital One Equities, said that in 2003 profits of the company will stay within Rs 1.35 billion to Rs 1.40 billion or earning per share at 8.83 rupees to 9.15 rupees.

Moreover, final cash pay-out of Rs 3 per share or 30 percent along with 10 percent bonus issue.

The company has already paid 45 percent cash dividend.

Zaheeruddin Khalid, head of research of Elixir Securities, said that the Engro is to announce a net profit of Rs 1.356 billion for 2003, 19.7 percent higher than 2002.

The company is to announce a final cash dividend of Rs 3 per share, taking the full year to 7.5 rupees a share or 75 percent. The possibility of 5-10 percent bonus shares cannot be ruled out along with the results.

He said that the improvement in profitability would be driven by 2.4 percent increase in gross profit through record high production levels and sales and 26 percent decline in financial charges.

Going forward, we expect an 18 percent decline in profits of Engro given the pressure on margins after the culmination of 10-year subsidy on expansion plant.

We expect the recent speculative run up in Engro's share price to continue till the announcement of the result.

Engro is likely to have crossed the 950,000 tonnes production mark for urea during 2003. This record high production level will result in cost efficiency, impacting margins positively.

Net sales would be lower as compared with the last year due to 33 percent decline in sales of phosphoric and potassic fertilisers, he said.

Courtesy Business Recorder