Corporate results: Nishat beats expectation; KAPCO profit soars

Nishat Mills increase in net profit by 66 per cent to Rs4.84 billion, Kapco's net profit rise 28% to Rs6.53 billion

Express September 06, 2011


Nishat Mills beat market expectations as it posted increase an increase in net profit by 66 per cent to Rs4.84 billion during fiscal 2011 on the back of higher prices and other income.

The result was also accompanied by a final cash dividend of Rs3.3 per ordinary share of Rs10, according to a notice sent to the Karachi Stock Exchange on Tuesday.

Earnings, on average, were higher by 15 per cent from analyst expectation of Rs4.2 billion mainly due to higher than estimated gross margins.

Net sales improved by 54 per cent to Rs48.56 billion in the financial year on the back of favourable prices and higher contribution from the spinning segment, according to Global Securities analyst Sarfaraz Abid.

In addition, declining cotton prices during April to June translated into nominal support through higher volumes from value added sector of the company, added Abid.

Profit from core textile operations also improved by 33 per cent to Rs4.57 billion during the period under review from Rs3.43 billion last year.

Other income remained a significant highlight as it improved by 149 per cent to Rs2.45 billion during July 2010 to June 2011 with support from higher dividend income from increased investments, gains from divestment of AES Pak Gen and Nishat Power Limited.

Revenues from export sales were further supported by an average of two per cent depreciation of rupee against the dollar.

KAPCO profit soars

Kot Addu Power Company (Kapco), the largest independent power producer in the country, saw its net profit rise 28% to Rs6.53 billion in financial year 2011 on the back of higher interest income and lower maintenance cost.

Interest income grew on delayed payments from the Water and Power Development Authority, said Arif Habib analyst Usman Saeed.

The result was slightly lower than analyst expectation as they expected, on average, to stand at Rs6.7 billion.

The board of directors also announced a final dividend of Rs3.5 per share, taking the total dividend for the year to Rs6.5 per share.

The plant mainly operated on expensive oil due to non-availability of gas, according to Nepra data. The plant running at 56% capacity generated 1,626 gwh of electricity in the final quarter of the financial year.

Due to piling receivables from Wapda, the company’s other income jumped more than twice to Rs8.38 billion in financial year 2011 earned through higher markup earned on delayed payments from Wapda. Swelling receivables and payables is the reason for the circular debt that is crippling the energy sector.

The company stock price rose Rs0.44 to close at Rs44.05 to close during trade at the Karachi Stock Exchange.

Financial charges rose 63% to Rs8.68 billion on short-term borrowing and penal interest charges payable to Pakistan State Oil’s receivables. In a bid to pile pressure on independent power producers to withdraw their notices, Pepco on Monday stopped paying routine dues to the nine IPPs including Kapco which asked the government to release sovereign guarantees due to default on payment of Rs31 billion by Pepco.

Published in The Express Tribune, September 7th, 2011.