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Engro Polymer - Analysts Briefing

Engro Polymer - Analysts Briefing

In the first half of 2025, Engro Polymer (EPCL) posted a loss of PKR 3.2 billion due to squeezed Ethylene-to-PVC margins, high gas prices, and plant maintenance costs, despite a 9% revenue increase driven by higher PVC, caustic soda, and hydrogen peroxide sales. PVC volumes rose 21% year-over-year to 115,000 tons, while global PVC prices remained weak at USD 730/ton amid oversupply and soft construction demand. Ethylene prices softened to USD 850/ton by June, compressing margins to USD 275/ton, and caustic soda profitability was also impacted by elevated energy costs. The company anticipates improved PVC demand ahead, supported by construction recovery and falling interest rates, although prices are expected to remain subdued through late 2025. Energy sourcing remains a major challenge, prompting exploration of third-party gas and alternative power options.

Net Loss:  Company reported a loss of PKR 3.2 billion (Loss Per Share: PKR 3.55) in H1 2025 vs PKR 1.6 million (Loss Per Share: PKR 1.97) in H1 2024.

Loss Drivers: Decline in Ethylene-to-PVC margins, high gas prices, and maintenance costs of VCM and caustic soda plants.

Revenue Growth: Up 9% year-over-year in H1 2025 due to higher PVC and caustic soda volumes and new Hydrogen Peroxide (HPO) sales.

PVC Sales: 115,000 tons sold in H1 2025, up 21% from 95,000 tons in H1 2024.

HPO Launch: 3,000 tons sold since Feb 2025 launch; 15% local market share captured.

PVC Prices: Remain under pressure due to global oversupply and weak construction demand; currently at USD 730/ton.

Ethylene Prices: Firm in Q1 2025; softened to USD 850/ton by June.

PVC core delta margins averaged USD 275/ton.

Caustic Soda: Prices stable; margins pressured by high energy costs.

Outlook on PVC: Gradual improvement expected due to construction recovery and lower interest rates.

PVC Price Forecast (H2 2025): USD 700–800/ton range; recovery expected in 2026.

Gas Supply Challenge: Competitive gas access remains a constraint; company exploring third-party gas and alternative energy (grid and coal-fired sources). 




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