Results: Lotte Pakistan PTA profits rise 27%

KARACHI: Net profits of Lotte Pakistan PTA Limited have jumped 27 per cent to Rs4.5 billion in 2010 due to higher PTA (purified terephthalic acid) prices and margins.

The company also announced a final dividend of Rs1 per share, according to a notice sent to the Karachi Stock Exchange on Wednesday.

Lotte Pakistan is a supplier of PTA, an essential raw material used in the polyester industry. Over 30 per cent of PTA is sold to the polyethylene terephthalate (PET) sector while the remaining goes to the polyester staple fibre sector and others. PET is used in the plastics industry for the production of bottles and sheets.

Price and margin growth reflects strong net profit

Sales of PTA are expected to have remained strong – like the previous year when 506,000 tons were sold – on the back of robust demand from the downstream industry, said BMA Capital analyst Sana Bawani.

Revenues increased by 12 per cent to Rs42 billion on a yearly basis during 2010 with PTA prices getting close to a high of $1,400 per ton by the end of the year.

Furthermore, average primary margins also improved to more than $320 per ton compared with $250 per ton in 2009, which is expected to have improved the gross margin to 16.55 per cent from 15.55 per cent in the previous year, said Bawani.

The company’s other income nosedived around 18 times to Rs11 million compared with the previous year’s Rs197 million when the firm got an insurance claim.

Outlook: demand  to stay intact

Commodity prices continue to remain strong with cotton prices currently touching a record Rs10,600 per maund and New York futures trading at $1.60 per pound. The strong prices continue to benefit from rising global demand and liquidity which will bode well for the company.

Published in The Express Tribune, January 27^th,  2011.