PHOTO: AFP
KARACHI: Pak Elektron (PAEL) has posted a net profit of Rs741 million in the quarter ended September 30, up 39% compared with Rs534 million in the same period last year, according to a company notice sent to the Pakistan Stock Exchange (PSX).
However, Topline Securities, in its comments, said the result was lower than expectations.
Earnings per share increased to Rs1.53 in Jul-Sept 2016 from Rs1.23 in the corresponding quarter last year.
The KSE 100-share Index lost 439 points and closed at 40,852 points on Monday. PAEL’s share price fell to Rs68.83, down by a significant 4%.
Sales of the company grew 13% year-on-year (YoY) in the Jul-Sept quarter to Rs5.7 billion.
“We attribute this to better sales from the appliances segment, which has enjoyed a greater demand as well as increase in product prices; we believe this division had around 55-65% share in overall sales,” the report added.
Sales tax and discount increased 69% YoY to Rs1.5 billion in the third quarter of 2016 (3Q2016).
According to the Topline report, this was due to higher competition. Sales tax and discount to sales ratio came in at 20%, higher than the last five-year (2011-2015) average of 14%.
Meanwhile, gross profit rose 20% YoY to Rs1.7 billion in 3Q2016, resulting in gross margins of 30.7%, which improved 1.8 percentage points. Gross margins remained above the last five-year average of 23%.
“We attribute this to higher sales from the appliances division, which has enjoyed better margins than the power division,” said Topline Securities.
The company witnessed an uptick in the distribution cost in 3Q2016, which came in at Rs356 million, up 19% year on year. Finance cost clocked in at Rs376 million without posting any growth compared to the same period last year.
In the first nine months of 2016 (9M2016), sales increased 19% YoY to Rs22.4 billion. Gross profit rose 11% to Rs6.8 billion and gross margins fell 2.1 percentage points to 29.9%.
Greater-than-expected rupee depreciation against the dollar, a sharp increase in commodity prices and greater competition due to new entrants in the form of higher discounts from competitors were key risks for PAEL, the report warned.
Published in The Express Tribune, October 25th, 2016.
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