DAWOOD Hercules Corporation, a holding company with ownership stakes in corporate stalwarts like Engro Corporation and Hub Power Company, saw its half yearly profits skyrocket — thanks to the improved performances of its associated companies.

And things are expected to still improve for the company in the future, as its wholly-owned subsidiary, Dawood Fertilisers, as well as Engro Fertiliser (wholly owned by Engro Corporation), are both expected to benefit from a relatively more stable gas supply situation, according to a research report from Taurus Securities.

Fertiliser plants of both Dawood Hercules and Engro are among the four plants on the Sui Norther Gas Pipeline Limited network that have been allocated a total of 202mmcfd of natural gas from various gas fields. These two plants are together set to receive the lion’s share — 119mmcfd — of that gas supply.

This arrangement would help the four fertiliser companies operate at 80 per cent capacity by the second half of 2014. Dawood’s fertiliser plant’s capacity utilisation had slipped to a low of 13 per cent in CY2012, pointed out the report.

Dawood Hercules Corporation holds a roughly 38 per cent stake in Engro Corporation, which was valued at Rs27.1 billion as of last week, according to the Taurus Securities report.

The company said in its half yearly report for 2013-to-date that it had also acquired 14.25 per cent of voting power in the Hub Power Company (Hubco). The research report valued Dawood Hercules’ investment in Hubco at Rs10.5 billion as of last week.

For the first half of calendar year 2013 (1HCY13), Dawood Hercules reported a profit-after-tax (PAT) of around Rs609 million — up a whopping 222 per cent from its 1HCY12 PAT of Rs189 million. This translated into an earnings-per-share (eps) of Rs1.27, up from Rs0.39 during the same period last year.

Much of that earnings growth came on the back of a 184 per cent jump in the company’s dividend income, which rose from Rs261.6 million to Rs743.7 million during the period. Of this, dividends from Hubco had clocked in at around Rs139 million; the rest came from Dawood Fertiliser. Engro Corporation did not declare any dividend during the six-month period.

And despite the intermittent gas supply situation, the fertiliser arm of Dawood Hercules managed to increase its production of di-ammonium phosphate (DAP) by 13 per cent in 2QCY13 to 0.2 million tonnes from the same quarter last year. Sales of DAP went up by a big 51 per cent to 0.27 million tonnes.

Dawood Fertiliser also managed to sell 33,951 tonnes of urea during 2QCY13 — a 190 per cent jump from the 11,680 tonnes it sold in the same quarter last year.

In its half yearly report, Dawood Hercules Corporation attributed its better performance to higher production and sales of DAP. It also referred to the recent stellar financial performances of Engro and Hubco.

Company profile: Dawood Hercules Corporation Limited was incorporated as a public limited company in April 1968. The principle activity of the company is to manage investments in its subsidiary and associated companies. — Ali Raza Mehdi