Earnings: Mixed fortunes

The second largest oil distributor declares a payout of Rs14 per share in 2010.

KARACHI:

Suzuki profits shift down a gear

Pak Suzuki Motor Company, the largest automobile assembler, surprised analysts on Friday by announcing a 17 per cent drop in net profit to Rs211 million in 2010 on a higher tax rate.

The company also announced a final dividend of Rs1 per share along with the result, according to a communique sent to the Karachi Stock Exchange on Friday.

The result was lower than market expectations, as analysts expected the net profit to surge at least 70 per cent to Rs445 million.

The finance ministry, in November 2010, agreed to reduce turnover tax from one per cent to 0.5 per cent; however, an order released later showed that the reduction was not applicable to the auto assembling companies.

Suzuki’s tax rate jumped 164 per cent to Rs457 million in 2010, compared with Rs172 million in the preceding year.

Sales rose 53 per cent to 78,638 units in 2010 from 51,521 vehicles in the previous year. Furthermore, it outperformed industry sales growth of 38 per cent during the year, when a total of 147,000 units were sold, said BMA Capital analyst Sana Bawani.

It is also pertinent to note that the growth in sales has been achieved despite three upward price revisions during the year, added Bawani.

Suzuki’s sales revenue grew by 63 per cent to Rs42 billion due to strong sales at higher prices compared with last year.

Consecutive price increases by the company are expected to compensate for the cost increase, coming from the depreciation of the rupee against the Japanese yen by 11 per cent, and the 31 per cent rise in steel prices.

CNG vehicle sales to resume

A new CNG cylinder consignment has been released and the company has announced the commencement of CNG vehicle booking and deliveries with immediate effect, said BMA Capital analyst Sana Bawani.

Pak Suzuki Motor Company last month stopped bookings for Compressed Natural Gas (CNG) vehicles, which account for the majority of the company’s sales, after the Oil and Gas Regulatory Authority temporarily stopped the company’s sole Italian CNG cylinder supplier, Faber Cylinders, because of safety concerns.

Bank Alfalah profits firm to Rs968m

Net profit of Bank Alfalah rose eight per cent to Rs968 million in 2010, against Rs897 million posted in the preceding year.

Bank Alfalah’s board of directors approved the financial results in a meeting held in Abu Dhabi, UAE on Thursday.

Despite a challenging working environment and a fragile operational income, the bank continued its aggressive horizontal growth of branch expansion which resulted in a weak cash flow position, said an analyst.

Provision for bad debts dropped 40 per cent to Rs2.24 billion, while net interest income surged 25 per cent to Rs3.69 billion, in line with the industry trend.

Investment losses

Devaluation of investment in associates, particularly Warid, had been a potential downside risk to the bank’s profitability last year. As of September 2010, the aforesaid losses stood at Rs1.3 billion, of which Rs500 million was provided in September.

Standard Chartered profits quadruple

Standard Chartered profit almost quadrupled to Rs3.61 billion in 2010 from the preceding year’s Rs746 million.

The bank declared a final cash dividend of Rs0.6 for every ordinary share of Rs10 along with its result.

Provision for bad debts dropped significantly to Rs3.4 billion against Rs7.55 billion in 2009.

Shell profits drop despite surge in sales

Shell Pakistan’s net profit dropped 36 per cent to Rs1.6 billion, despite net sales rising 26 per cent to Rs224 billion in 2010.

The year was an exceptionally demanding period for the company, as profitability was adversely affected due to a significant reduction in margins, the company’s directors were quoted as saying in a review of the 2010 results.

In line with previous payouts, the second largest oil distributor in the country announced a healthy final payout of Rs8 per share, taking the full-year payout to Rs14 for every ordinary share of Rs10, according to a notice sent to the Karachi Stock Exchange on Friday.

Sales climb on higher oil prices

Net sales rose 26 per cent to Rs224 billion on the back of a 10.5 per cent increase in total volumes sold and a 24.3 per cent increase in average Arab light crude oil prices during 2010, according to BMA Capital analyst Muhammad Ali Taufiq.

Arab light crude oil prices stood at $89 per barrel, an increase of 12.7 per cent over the period compared to a whopping 88.6 per cent rise recorded during 2009.

Moreover, the recent freeze on margins of regulated products – motor spirit, kerosene, light diesel oil and high octane blending component – have decoupled margins with rising oil prices, added Taufiq.

Margins on high speed diesel remained fixed at Rs1.35 per litre and a drop in volumetric sales by 11 per cent due to the floods resulted in a decline in the contribution of the product to the company’s gross profits.

Lube sales declined by 4.8 per cent and gross margins of the product also shrank.

However, furnace oil sales came as a major savior for the top-line and gross profits.

Volumetric sales of the product increased by three times backed by higher demand from Nishat Chunian Power and Nishat Power and market penetration of the company increased in this segment amid energy crisis, informed Taufiq.

Furnace oil being a deregulated product generates margins of 3 to 3.5 per cent on ex-refinery prices and supported gross profits of the company amid rising prices of crude oil during 2010.

Published in The Express Tribune, March 5^th, 2011.