The companies listed at the Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index have posted record high profit of Rs875 billion in the fiscal year ending June 30, 2021 due to government’s pro-growth and business friendly policies and low interest rate during the year.
“Earnings augmented 56% to an all-time high of Rs875 billion during FY21 compared to Rs562 billion in FY21,” Arif Habib Limited Head of Research Tahir Abbas said in a report on Tuesday. “Broadly speaking, a sharp U-turn in domestic demand helped cyclical sectors post an impressive rebound in profitability with some segments swinging into healthy profits compared to losses last year.”
The brokerage house report is based on analysis of KSE-100 index companies. It included the financial results of 83 companies while the remaining 17 companies in the index have not posted their results yet. The companies which have been included in the analysis represent almost 89% of the market capitalisation of KSE-100.
The jump in earnings in FY21 was fuelled by cyclical sectors with cement sector posting profit worth Rs40.6 billion against losses of Rs2 billion in the prior fiscal year and oil marketing companies (OMCs) posting earnings of Rs39.3 billion against losses of Rs13.4 billion.
Automobile assemblers displayed a five-fold growth in earnings in FY21 compared to FY20, fertiliser sector’s profit grew 92% in the year, banks 18%, chemicals 130%, power 22%, textile composite 97% and tobacco sector’s earnings surged 36%.
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On the flipside, earnings of insurance companies during FY21 declined by a meagre 3% on a year-on-year basis.
Sectors leading growth in profitability included textile spinning, cable and electrical goods, automobile assemblers, technology and communication and sugar.
During the same year, the benchmark KSE-100 index grew by 37.6% (or 12,934 points), the analyst said in the report.
Technology sector held the highest contribution in the growth (2,489 points in the benchmark index) followed by cement (2,064 points), banks (2,059 points), fertiliser (842 points), textile composite (768 points), power (670 points) and auto assemblers (667 points).
In addition, food (598 points), oil marketing companies (377 points), oil and gas exploration companies (361 points) and chemical (360 points) sectors also added a substantial proportion to the rise.
However, the tobacco sector erased 60 points from the index followed by miscellaneous which offloaded another 52 points during the year under review.
4QFY21 earnings
Earnings of companies listed at the KSE-100 index depicted a healthy trend for another quarter and raised the benchmark index by 67% on a year-on-year basis as compared to the same quarter last year when industries were operating under the lockdown.
During the quarter, major contributors behind the growth included oil marketing companies (OMCs), cement, automobile assemblers, fertiliser, oil and gas exploration companies, chemicals, textile composite, and technology and communication.
In comparison, earnings of commercial banks remained stagnant in the quarter compared to the same quarter of last year while bottom-line of refinery and power generation posted a decline.
Published in The Express Tribune, September 29th, 2021.
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