On behalf of the Board of Directors, I am humbled to present to you, once again, the Annual Report of Engro Corporation Limited. Enclosed herein is the overall performance of the Company and effectiveness of the Board in providing guidance and direction to the leadership, enabling them to achieve the Company‘s aims and objectives for the year ended 31st December 2018.
First and foremost, I would like to offer my gratitude to each of you for your continued confidence in Engro Corporation as the trusted choice for your investment. Your trust in us further fuels our passion for Pakistan and enhances our determination, as Engro, to work towards progress and prosperity for the country, especially in the communities and value chains in which we operate. Secondly, I would like to congratulate the entire team of Engro Corporation on achieving incredible milestones in 2018, under the able leadership of Ghias Khan.
This year has been an important one for Engro; we have broadened our spectrum once again. Having demonstrated unwavering resolve over the years to address issues that hinder the country’s progress, including the energy crisis and food security concerns, we are committed to solving prevalent issues in Pakistan and exploring new opportunities to create value for all our stakeholders. We also care deeply about environmental impact and safety of people.
At Engro, we encourage a growth mindset, strive to have impeccable character, and live by the highest standards of integrity, thus inspiring trust from others. We endeavour to serve our country, community, and company with humility and strong belief in the dignity and value of all individuals. With this in mind, we identified a severe need for effective leadership development in Pakistan and took this challenge up as another opportunity to give back to the nation. I am pleased to share that our plans to address the situation have come to fruition.
With the mission to hone and develop our leaders of tomorrow, we established the Engro Leadership Academy at the Karachi School of Business & Leadership. Facilitated by globally recognized experts, ensuring a carefully designed curriculum suited to the corporate needs of Pakistan, the Academy was inaugurated by His Excellency Dr. Arif Alvi in December 2018. We are proud to share that the first batch of Engro leadership has experienced the program, and are implementing the teachings in their everyday work.
The Academy focuses uniquely on leadership development. The purpose is to inspire the development of effective leaders who can make decisions on the basis of truth, humility, integrity, competence, and, most importantly, trust. Our focus is on the integrative development of the individual, to develop them as people who can take the reins and lead the way tomorrow.
Furthermore, the hallmarks of the type of leaders that the Academy would like to develop revolve around a defined characteristic of leadership with humility, strength of character, resilience, and service to one’s community and country. These leaders contribute to a vibrant private sector that serves to create value in people’s lives.
On a separate note, I am pleased to share Samad Dawood has assumed the role of Vice Chairman of the Board. The performance of the Board throughout the year remained in line with our endeavour to continuously improve the governance and decision-making in the Company. The contributions of the Board effectively steered the Company towards achieving our objectives, creating new benchmarks, and maintaining its reputation for good governance, while providing steady returns to the shareholders.
The expertise of members of the Board includes competence in robust governance frameworks, leadership and entrepreneurship, private equity, investment banking, strategic deal-making, talent management, communication and advertising, and education. By leveraging the diverse skillsets of the Directors for shared leadership with the management, we aim to create profitable growth for the Company.
The Board Audit Committee strives to ensure that the governance structure is 100% compliant, while monitoring high standards of ethics, control procedures, and risks associated with the business as identified by the Board.
On behalf of the Board, I express our gratitude to you, my fellow shareholders, for your continued support and confidence.
By the grace of God, I am humbled to report that 2018 has been another year of successes for Engro. Our businesses delivered strong performances and displayed operational excellence, yet again, by achieving an optimal level of utilization of assets. It is my pleasure to share with you the highlights of Engro Corporation's performance in 2018 and shed light on all the important work we are undertaking to ensure a sustainable operating model.
Engro Corporation posted a consolidated profit after tax of PKR 23.6 billion for 2018, up from PKR 16.3 billion the previous year. On a standalone basis, our revenue was PKR 11.2 billion, while the Company posted an earnings per share of PKR 24.28 with total dividends of PKR 21 per share for the year, translating into an overall dividend payout of 86%. In addition to the cash dividend, the Company also announced the issuance of 10% bonus shares.
Our energy investments were first and foremost a commitment to the country and, as we move forward, we continue to explore more opportunities in the renewable and thermal space. The performance of our first power project, Engro Powergen Qadirpur Limited, has been consistent; furthermore, the management has introduced cost optimization initiatives to maximize shareholder returns. A defining moment for 2018 was the unearthing of the first coal seam by Sindh Engro Coal Mining Company Limited in June. With over 97% of the project now completed safely and successfully, the Thar coal project will, God willing, come online as per schedule.
The financial performance of Engro Fertilizers Limited was nothing less than outstanding. The Company posted a historic profit of over PKR 17 Billion, recording a phenomenal growth of 59% versus last year. This was primarily due to higher fertilizers sales volumes and higher urea prices. Engro Fertilizers also announced a final dividend of PKR 3.00 per share in addition to interim dividend already paid at PKR 8.00 per share for the year ended December 31, 2018.
Moreover, I am pleased to report that Engro Eximp Agriproducts also had its first ever profitable year after posting losses since inception. It serves as a reminder that we can overcome challenges with our determination, persistence, and a relentless focus on the bigger picture.
Despite the challenges faced by Engro Vopak, the Company exhibited utmost resilience as it increased its LPG market share to 60% from previous of 55%. Whereas Engro Elengy, once again, achieved a world-record milestone of fastest 200 Ship-to-Ship transfers.
For Engro Polymer & Chemicals Limited, a profit after tax of approximately PKR 4.4 Billion was posted in 2018 against a profit after tax of PKR 2 Billion in the previous year. The completion of PVC/VCM de-bottlenecking resulted in the highest ever production of both PVC and VCM, which not only contributed to the profitability of the Company, but also brought it another step closer to meeting domestic demand.
Financial visibility and quick decision-making are crucial for stakeholder confidence, especially for a conglomerate like Engro. We understand that technology is at the center of business change; hence, we partnered with globally recognized technology experts and initiated Project OneSAP this year. Through OneSAP, we will bring platforms together to gain greater efficiencies across our financial systems and create synergies across all Engro entities. We are confident that this is our journey of continuous improvement; we have raised the bar for ourselves, and we will only go higher from here.
While we continue to grow on the business front, we at Engro also focus on the well-being of our people. Year after year, we strive to invest in world class safety systems and have integrated a proactive safe working culture throughout our operating environment. Recognizing that our people make all the difference, we strive to consistently attract, hire, and retain high-quality talent so that, together, we can combine our strengths and skills to build a successful partnership to help sustain our competitive edge. In this vein, we set up the Engro Leadership Academy in 2018 with the vision to develop effective leaders who are well-equipped to transform and steer Engro's businesses and deliver on our promise of solving some of Pakistan's most pressing issues.
A key philosophy at Engro is to create sustainable livelihoods under the ambit of Engro Foundation. To maximize social and economic impact of our developmental initiatives, Engro Foundation has pivoted to an inclusive business model that targets low-income communities where Engro businesses are based. By innovatively providing low-income communities with opportunities for skills development and livelihood, we create an ecosystem of employment, functional markets, products and services that spurs economic growth in targeted underprivileged areas and encourages entrepreneurship.
This year, we received the UN Global Compact Business Sustainability Award, which recognizes the Foundation's efforts, always made in partnership with one of Engro's Group Companies, to maximize our economic and social impact. Our focus remains on human development in our value chains, allowing for better lives for those affected by our businesses, and also directly involving them in our successes. For the 7th year, Engro Foundation successfully hosted its flagship event, the I Am the Change Awards, meant to empower organizations that are making meaningful impacts in innovative ways to scale up, become sustainable, and positively impact more Pakistani lives.
The year 2018 was one in which considerable time of the management and Board of Directors was spent on charting out Engro’s future. The Board approved “The Central Idea” of the corporation, which articulates the purpose of the organization through various decision-making frameworks that will enable us to realize our purpose. As an emerging economy with a growing population and lagging human development indicators, Pakistan faces various challenges. At Engro, we consider it our individual and institutional responsibility to address some of these challenges and pressing issues, by creating commercially viable businesses in those areas. Engro will endeavor to play its part in increasing the agricultural productivity of the country, provisioning of energy, building of infrastructure to provide data & information access to the masses, and help build basic industry through projects in the petrochemical vertical. While we will look to change and evolve with agility, what will never change is our fundamental belief that what is good for Pakistan and good for people is good for Engro.
In the end, I would like to thank the Chairman, Vice Chairman, and Board of Directors for their invaluable guidance, our stakeholders for trusting us, and the entire Engro family of employees for their undeniable contribution through sheer hard work and dedication, working every day towards the betterment of our economy and citizens of this country.
integrated report 2018
We are pleased to share the 2018 Integrated Report, which details Engro's efforts to deliver business results in conjunction with sustainable methods that impact both our value chains and our consolidated bottom line. This report provides a holistic view of our aim to connect Pakistan to the world — across brands, employees, operations, and business partners — and make meaningful differences in people’s lives for a better tomorrow.
Every day, we work to be a force for good and a force for growth. Our aspiration is to positively impact all our stakeholders in each area of Ethics & Corporate Responsibility, Community Impact, Diversity & Inclusion and Environmental Sustainability.
Engro makes an impact in communities around the Country through our people, brands and partners. This report celebrates our collective thinking and our ability to win. By creating an environment where diverse people can come together and offer their best thinking, ideas, performance and more ideas for growth are realized. To amplify this effort, our visual vocabulary is composed of inter-connected dots to convey a stellar sense of connection and interaction as we connect Pakistan to the world, for a better tomorrow.
We aspire to build a better tomorrow for all of us — inside and outside of Engro — free from all boundaries. Which is why we’re working to connect with our customers and stakeholders, and we’ll do it within our purpose, values and principles. We’ll always do it the Engro way, with integrity and with competitive passion. That’s Engro at its best.
As a group, Engro endeavors to improve lives, empower livelihoods and inspire meaningful change.