Corporate earnings : Sector giants record improvement

Major players in oil, power, banking, fertiliser, and auto industries recorded an increase in profits.

KARACHI: OGDCL profits up

The Oil and Gas Development Company Limited witnessed a 25 per cent rise in profits in the quarter ended March 31, recording profit after tax of Rs17.59 billion against Rs14.12 billion in the same period last year.

Net sales increased from Rs35.96 billion to Rs41.18 billion, due to higher average crude oil and gas prices. Average prices for Arab Light and gas have jumped, led by upward revision in wellhead prices of Qadirpur and Bobi fields.

Royalty expenses increased, standing at Rs5.14 billion, while exploration expenses, on the other hand, slid to Rs599.76 million from Rs1,414.13 million, mainly on the back of muted exploration activities.

Earnings per share for the quarter stood at Rs4.09 against Rs3.28 last year. However, the result was in line with market expectations, as analysts had expected net profit for the nine months ended March 31 to stand at Rs49.5 billion. The actual figure was Rs49.18 billion, up from Rs42.61 billion last year

The company also announced an interim dividend of Rs1.5 per share, above the expectations of analysts, who had predicted the dividend to be at Rs0.75. However, OGDCL’s stock lost Rs0.12 to close at Rs138.92 during trade at the Karachi Stock Exchange on Wednesday.

Engro profits edge upwards

Engro Corporation posted a net profit of Rs2.04 billion for the quarter ended March 31, a 13 per cent rise over the Rs1.81 billion recorded in the corresponding period of the preceding year. Earnings per share stood at Rs5.2, depicting an increase of eight per cent against Rs4.8 last year.

Total sales during the quarter were recorded at Rs21.85 billion, a 30 per cent increase over Rs16.86 billion last year. The improvement in earnings is primarily due to an 80 per cent jump in urea earnings, which accounted for 27 per cent of total sales of the company. Margins of the urea business stood higher at 52.6 per cent mainly due to higher urea prices.

Other incomes also jumped from Rs134.84 million to Rs343.55 million. However, financial expenses increased 61 per cent from Rs903.91 million to Rs1,451.06 million, due to debt obligation and higher working capital requirements.

Analysts had, however, expected the company’s profits to stand at Rs2.4 billion, with earnings per share of Rs6.02. The company’s stock gained Rs0.12 to close at Rs195.03 during trade at the Karachi Stock Exchange on Wednesday.

UBL posts higher profits

United Bank Limited followed the trends that have prevailed in the banking sector in the quarter ended March 31, posting an 18 per cent increase in profits. The bank’s profit after tax increased from Rs2.78 billion to Rs3.27 billion in the corresponding period last year.

The rise has mainly come from an 11 per cent increase in net interest income, on the back of higher earnings yield, along with a lower cost of funds. Net interest income increased from Rs8.2 billion to Rs9.1 billion. Moreover, a significant increase in fee income, which increased from Rs1.47 billion to Rs1.6 billion due to increasing trade and remittances business, also contributed to the higher earnings.

However, expenses negated some of the impact, as administrative expenses increased from Rs4.08 billion to Rs4.64 billion.

Earnings per share also increased from Rs2.27 to Rs2.67. The result, however, was below market expectations, as analysts had predicted a 25 per cent jump in profits to Rs3.5 billion, and earnings per share of Rs2.85.

The bank did not announce any dividend for the quarter. That, along with below-expectation earnings, resulted in the bank’s stock losing Rs0.42 to close at Rs63.78 during trade at the Karachi Stock Exchange on Wednesday.

KESC mitigates losses

The Karachi Electric Supply Company (KESC) witnessed a massive drop in its losses in the three months ended March 31. The company’s loss after tax almost halved from Rs4.4 billion to Rs2.3 billion. Loss per share was recorded at Rs0.11 against Rs0.22 last year.

Revenues rose significantly from Rs15.22 billion to Rs17.35 billion, but the impact of almost the entire increment was negated by the rise in tariff adjustment, which rose from Rs9.15 billion to Rs11.92 billion during the period.

The biggest increase was recorded in fuel and oil costs, which rose by around 45 per cent to Rs9.46 billion, due to rising prices in the domestic and international markets, as well as greater dependence on oil for generation of electricity. Additionally, expenses incurred on generation and transmission jumped from Rs2.63 billion to Rs3.41 billion. However, other operating incomes helped the company cut back on its losses, more than doubling to Rs1.74 billion.

On a nine-month basis, the company’s accounts reflected a similar trend, as loss after tax dropped from Rs13.29 billion to Rs5.42 billion, while loss per share also dropped from Rs0.67 to Rs0.25.

The company, however, announced no dividend. KESC’s stock lost Rs0.02 to close at Rs2.5 during trade at the Karachi Stock Exchange on Wednesday.

Pak Suzuki switches to profit

Pak Suzuki Motor Company managed to record a profit in the quarter ended March 31. The company, one of the largest automobile manufacturers in the country, recorded a profit after tax of Rs91.43 million, against a loss of Rs17.61 million in the first quarter of the previous year.

The profit can be attributed to a rise in the gross profit margin, which increased from 1.41 per cent to 2.73 per cent. Additionally, sales also jumped by 25 per cent to Rs12.57 billion, compared with Rs10.04 billion last year.

Analysts explained that the higher gross profit margin was due to the company’s pricing strategy, through which vehicle prices have been jacked up in recent months, with the company citing constant depreciation of the rupee and rising input prices as the reasons.

However, other operating income fell from Rs144.27 million to Rs131.52 million, while workers’ funds also negatively impacted earnings, increasing from Rs3.87 million to Rs16.33 million.

Pak Suzuki’s earnings per share were recorded at Rs1.11 – a significant improvement over the Rs0.21 loss per share in the corresponding period last year. The company’s stock lost Rs0.52 to close at Rs68.36 during trade at the Karachi Stock Exchange on Wednesday.

Silkbank turns to profits

Silkbank witnessed an impressive improvement in the quarter ended March 31, recording a profit of Rs101.99 million compared with a loss of Rs409.62 million in the corresponding period of the previous year.

Silkbank too followed the same trend as the rest of the banking industry in terms of net interest income which increased sevenfold. Interest earned increased from Rs1,589.87 million to Rs2,014.68 million, while interest paid remained flat at Rs1,539.08 million, due to higher earnings yield, along with lower cost of funds. Fee income rose by 11 per cent to Rs101 million.

Another area that underwent significant improvement was that of provisions/reversals against non-performing loans, with the Rs42.71 million provision figure switching to a reversal figure of Rs270.19 million. Dividend income of the bank doubled to Rs22.37 million, however, other incomes halved from Rs80.65 million to Rs40.69 million.

Earnings per share for the period stood at Rs0.04, up from a loss of Rs0.38 in the first quarter of last year. The bank, despite the profit, did not announce any dividend in the quarter. Silkbank’s stock increased by Rs0.08 to close at Rs2.23 during trade at the Karachi Stock Exchange on Wednesday.

Published in The Express Tribune, April 28^th, 2011.