Corporate earnings rise 34%

Profits in the corporate sector increased by 34 per cent year-on-year in the quarter ended June 2010.

Profits in the corporate sector increased by 34 per cent year-on-year (YoY) in the quarter ended June 2010. However, the stock market’s temperament continued to be uncertain as it registered an increase of three per cent in the three months. This was revealed by a report published by JS Global Capital Limited.

According to analysts at JS Global, amongst the best performing sectors in terms of earnings growth were the oil and gas exploration (33 per cent YoY), the auto assemblers (76 per cent YoY), the textile (559 per cent YoY) and the fertiliser sector (76 per cent YoY).

Recovery in wellhead prices and increased production flows from fields drove profits in the oil and gas exploration sector while auto assemblers benefitted from higher unit sales, higher prices and lower steel costs. Higher prices and lower costs accounted for the rise in profits of the fertiliser and textile sectors respectively. However, the sectors are not expected to repeat their performance with rising input prices and subdued demand after the floods.

The banking sector registered a growth of seven per cent in the quarter under consideration. However, the growth in profits rises to 24 per cent with the exclusion of NIB Bank. NIB Bank made unusually high provisions against non-performing loans and this reflected in a loss in earnings.

Oil marketing companies suffered a decline in earnings of nearly 24 per cent with higher inventory losses and tax expenses taking the blame. Telecom earnings suffered due to high marketing expenses and the cement sector suffered from lower cement prices due to a disagreement amongst industry players.

Published in The Express Tribune, October 2^nd, 2010.