Corporate results: Shell profits almost double, NBP up

Shell Pakistan almost doubled their profits, while National Bank too had increased profits. Suzuki remained stagnant.

Express August 18, 2011


Shell profits almost doubled in the first half of 2011, although still falling short of market expectations due to rising costs of doing business.

The company’s net profit rose 95 per cent to Rs1.41 billion during January to June 2011 compared with Rs720 million in the same period last year.

The increase is primarily due to favourable movements in the international oil prices during the period with support from improved performance in the export business, said Shell chairman Sarim Sheikh in a statement on Thursday.

Analysts missed the actual number by 20.6 per cent as they expected the oil market company’s net profit to stand at Rs1.7 billion. The company continues to be impacted by very low regulated margins set by the government for petrol and diesel and high financial costs due to significant delay in recovery of refunds. Cost of sales jumped 29 per cent to Rs116 billion from last year’s Rs90 billion.

Regulated margins for petrol and diesel in Pakistan remain one of the lowest in the region and have been further reduced by the government in late 2010, at a time of both rising oil prices and increasing cost of doing business.

Government receivables are now creeping above Rs13 billion mainly related to refund of indirect taxes and fuel subsidies. This is causing a continually high financing charge on the company. Financial charges swelled 57 per cent to Rs895 million in the period under review.

Since the inception of these receivables, the delays in settlement have already cost the company over Rs3 billion in interest costs.

National Bank profits up

National Bank of Pakistan (NBP) posted lower than expected profits of Rs8.13 billion during the half year ending, however, the bottom-line rose three per cent on a yearly basis.

The company’s stock price dropped Rs2.28 to close at Rs43.47 at the Karachi Stock Exchange, one of the reasons the bourse fell on Thursday.

The largest bank’s net profit fell five per cent, short of analysts expectation as they expected it to stand, on average, at Rs8.6 billion.

Net interest income increased by 9.4 per cent to Rs 1.95 billion on the back of higher Kibor and 7.4% higher average earning assets, according to Arif Habib analyst Faisal Khan.

Non-interest mark-up income increased by Rs 1.53 billion or 18.4 percent compared to corresponding period last year as a result of higher fee income and compensation on tax refunds.

Administrative expenses increased by 12 percent which is in line with inflation and salary increases.

Bank’s deposits increased by Rs14 billion compared with June 2010.

Advances increased by Rs26 billion compared to December 2010 mainly in corporate and agriculture sector, according to a statement released by the bank. The bank is on track for its infrastructure upgradation project for online branches.

Suzuki in cruise control

Pakistan Suzuki Motor Company’s (PSMC) profit remained stagnant during the first half of 2011 on the back of higher tax rate and decreasing other income.

The country’s largest automobile maker’s net profit fell less than a per cent to stand at Rs279 million during January to June 2011, according to a notice sent to the Karachi Stock Exchange on Thursday.

Improved pricing scenario rendered into better gross margins which improved 30 basis points to stand at 3.5 per cent compared with 3.2 per cent last year, said Topline Securities analyst Furqan Punjani.

However, improved gross profitability failed to move the net profit upwards as 13 per cent decline in company’s other income to Rs271 million and higher tax rate of 49 per cent compared with 46 per cent last year.

The company’s stock price rose Rs1.79 to close at Rs65.84 at the Karachi Stock Exchange as the result was better than market expectation.

The flat earning was also because both sales and cost of sales grew by six per cent in the period under review, said analysts.

Revenue increased by six per cent to Rs23.3 billion on the back of a slight increase in volumetric sales.

Other operating income fell by 17 per cent to Rs271 million due to lower advances from customers.

PSMC sold just three per cent more units this year as its volumetric sales stood at 41,621 units against 40,318 units in the same period last year.

Published in The Express Tribune, August 19th, 2011.