Corporate results: Lotte Pakistan beats market expectations

The improvement is mainly due to higher primary margins enjoyed by the company, said analyst Furqan Punjani.


Express August 25, 2011

KARACHI:


Lotte Pakistan PTA posted better than expected half yearly results on Thursday by showing a significant improvement of 69 per cent in net profit. The company’s net profit stood at Rs3.7 billion in the first six months of 2011 compared with Rs2.2 billion in the same period last year, according to a notice sent to the Karachi Stock Exchange.

The improvement is mainly due to higher primary margins enjoyed by the company, said Topline Securities analyst Furqan Punjani. Gross margins of the company improved by 270 basis points to 18.5 per cent in the first half of 2011 compared with 15.8 per cent in same period last year.

The bottom-line was eight per cent higher than market expectations as analysts expected the net profit to stand, on average, at Rs3.4 billion. The company’s stock, the second most traded share at the Karachi stock exchange today, gained Rs0.23 to close at Rs11.08. With higher PTA prices, net revenues improved by 47 per cent to Rs30.6 billion.


Besides massive improvement in gross profitability, other income also improved by 23 per cent Rs503.6 million on the back of higher return on bank deposits amid improved cash flows.

However, in 2Q2011 alone, company profitability declined by 4 per cent to Rs0.8 per share compared to Rs0.83 in same period last year.  This decline was primarily attributed to decline in primary margins against same period last year.

Quarterly profits drop

Meanwhile, the compan’s performance dropped during April to June 2011 as net profit dropped four per cent to Rs1.21 billion.

The company cited lower PTA tariff and higher cost of electricity as the reason for the drop, according to statement issued by the company.

ICI Pakistan divides, profits falls

ICI Pakistan’s net profit fell 16 per cent to Rs972.6 million in the first six months of 2011 while the board of directors approved divestment of the company.

The paints business will be separated from ICI and vested in AkzoNobel Pakistan along with all its assets, rights, liabilities and obligations against the issue of shares by AkzoNobel Pakistan to the shareholders of ICI, according to a statement released by the company.

The company also announced interim dividend of Rs3.5 per ordinary share of Rs10 in the period under review.

Revenues grew by 20% to Rs20.4 billion in the period under review primarily on the back of higher prices for polyester staple fibre and soda ash.

Shares in the reduced capital of ICI will continue to be listed while shares of AkzoNobel will be listed in due course.

BMA Capital estimates that paints business is currently valued at Rs25 per share out of the entire Rs182 per share, contributing 14% to the company.

AkzoNobel will issue at par 46.4 million ordinary shares at Rs10 each while allotment shall be made in proportion to the shares of ICI held by the registered shareholders of the company.

Therefore, each shareholder in ICI will be allotted 33.46 fully paid up ordinary shares of AkzoNobel Pakistan.

The same will result in a reduction in the issued and paid up share capital of ICI to 92.4 million ordinary shares of Rs10 each. Therefore each shareholder shall be allocated 66.54 shares of ICI.

Published in The Express Tribune, August 26th,  2011.

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