Corporate earnings: Mixed fortunes for major companies

MCB's profits increase while National Bank profits flat.

KARACHI: MCB Bank records higher profits

MCB Bank managed to increase its profits by 21 per cent in the first quarter of 2011, recording a profit after tax of Rs5.02 billion against Rs4.14 billion in the first quarter of 2010.

MCB’s results were in line with other banks, with better-than-expected results being recorded in the sector. The trend in interest earned prevailed, as the bank’s interest earnings rose from Rs13.1 billion to Rs15.96 billion – a jump of 21.83 per cent. Non-interest income also increased from Rs1.4 billion to Rs2 billion in the period under review.

The bank also witnessed a rise in expenses, albeit the increase was insignificant compared with the rise in incomes. The most significant change in expenses came in operating expenditures, which rose from Rs2.88 billion to Rs3.91 billion. Moreover, interest expenses increased to Rs5.04 billion, compared with Rs4.37 billion in the same period last year.

MCB Bank’s earnings per share increased from Rs5.45 to Rs6.61. Subsequently, the bank announced a 30 per cent dividend, at Rs3 per share. The healthy improvement in earnings attracted investors, as the bank’s stock gained Rs3.95 to close at Rs206.88 during trade at the Karachi Stock Exchange on Tuesday.

Sui Southern switches to profit

Sui Southern Gas Company turned from loss to profit in the quarter ended March 31, recording a profit after tax of Rs117.58 million, compared with a loss of Rs525.97 million in the same period last year. Earnings per share were recorded at Rs0.14, against a loss per share of Rs0.63 last year.

Sales dropped from Rs31.64 billion to Rs29.59 billion, while the figure for sales tax remained flat at around Rs3.73 billion.

The company managed to cut its gross losses, which were recorded at Rs318.2 million, against Rs1,521 million last year.

Administrative and selling expenses stood at Rs760.26 million, while other operating expenses shot up tenfold, as last year’s Rs52.72 million figure rose to Rs525.26 million. However, non-operating incomes made up for the increment, rising from Rs2.14 billion to Rs2.7 billion in the quarter.

On a nine-month basis, Sui Southern managed to switch from a loss of Rs306.49 million to a profit of Rs2,230.7 million, largely due to a drop in the gas development surcharge levied.

Despite the profit, no dividend was announced. During trade at the Karachi Stock Exchange, the company’s stock lost Rs0.5 to close at Rs22.21.

Lotte Pakistan profits almost treble

Lotte Pakistan PTA’s profits jumped 170 per cent in the quarter ended March 31. The company recorded a profit after tax of Rs2,488.89 million, compared with Rs920.69 million in the corresponding period of the previous year. Earnings per share also rose from Rs0.61 to Rs1.64.

Revenues and gross profit margins were higher in the period under review due to higher PTA prices, which stood at $1,430 per ton. The company’s sales rose from Rs9.32 billion to Rs15.95 billion, while gross profit also shot up by 186 per cent compared with the first quarter of last year.

Distribution and selling expenses increased as well due to higher export sales, which resulted in a significant rise in freight and handling costs, which are borne by the company. Other operating expenses increased from Rs41.62 million to Rs279.28 million in the quarter, which the company attributed to a rise in worker funds. The increments, however, did not impact the net profit.

Despite the increase in profits, Lotte Pakistan did not announce a dividend. The company’s stock was the overwhelming favourite for investors during trading at the Karachi Stock Exchange on Tuesday. The stock contributed 54 per cent to the day’s total volumes, gaining Rs0.98 to close at Rs16.66.

National Bank profits flat

National Bank of Pakistan’s profits were flat in the first quarter of 2011, with profit after tax being recorded at Rs4,220.17 million against Rs4,215.77 million in the corresponding period last year. Resultantly, earnings per share remained range-bound, rising from Rs3.13 to Rs3.14.

Following the trend that has prevailed in the entire banking sector, interest earned rose to Rs23.17 billion – a 10 per cent increase over last year’s Rs21.04 billion. However, interest expenses also increased from Rs10.98 billion to Rs12.22 billion.

A jump in operating expenses, however, caused the bottom-line to remain flat. Expenses rose by 14 per cent to Rs6.58 billion from Rs5.81 billion last year.

According to Topline Securities, the share of non-interest income to total income reduced to 14 per cent from 16 per cent, as non-interest income reduced by 9 per cent to Rs3.7 billion amid lower gain on sale of securities. However, encouragement was received from the fact that provisioning against non-performing loans (NPLs) dropped by 28 per cent to stand at Rs1.4 billion.

The bank did not announce any dividend either. Consequently, the bank’s stock lost Rs0.45 to close at Rs53.47 during trade at the Karachi Stock Exchange on Tuesday.

Byco profits jump

Byco Petroleum Pakistan saw its profits jump in the first quarter of 2011. The company recorded a profit after tax of Rs354.35 million against Rs25.15 million in the corresponding period last year. As a result, earnings per share rose from Rs0.06 to Rs0.9.

Net sales of the company rose by 11 per cent to stand at Rs11.56 billion. However, despite the increase in sales value, the gross profit margin declined from 4.1 per cent to 3.46 per cent due to a rise in the cost of sales. Expenses during the quarter remained flat, though other incomes rose from Rs449.43 million to Rs808.5 million.

In the nine months ended March 31, Byco managed to mitigate its losses, recording a loss after taxation of Rs561.57 million against Rs1,930.6 million in the same period last year. Loss per share also dropped from Rs4.92 to Rs1.43. The positive result can be attributed to a higher gross profit margin in the nine months, as well as other incomes, which trebled to Rs1,583.26 million.

The rise in profits during the quarter was not accompanied by the announcement of a dividend. However, the positive result was enough to attract investors, as the company’s stock gained Rs0.1 to close at Rs8.83 during trade at the Karachi Stock Exchange on Tuesday.

Indus Motor profits drop

Indus Motor Company recorded a 14 per cent drop in profits, posting a profit after tax of Rs694.79 million in the quarter ended March 31, compared with Rs809.71 million in the corresponding period of the preceding year. Resultantly, earnings per share dropped from Rs10.3 to Rs8.84.

The value of the company’s sales improved significantly, rising from Rs16 billion to Rs18.46 billion in the quarter. However, gross profit margin declined from 7.12 per cent to 6.22 per cent. Other operating income also declined from Rs465.72 million to Rs347.91 million in the quarter, which analysts believe is due to lower cash available from a fall in unit sales.

In the nine months ended March 31, company profits declined by 35.78 per cent, falling to Rs1.6 billion compared with the same period last year. Earnings per share also dropped from Rs27.66 to Rs20.39. Once again, gross profit margins dropped, which analysts attributed to depreciation of the rupee against the Japanese yen, as well as rising input costs. The company has increased prices of most models in recent months, but has been unable to maintain its profit margins.

The company did not announce any dividend for the quarter. Indus Motor Company’s stock lost Rs1.76 and closed at Rs221.8 during trade at the Karachi Stock Exchange on Tuesday.

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