9MCY14: Country’s consumer sector shows stable growth

Sales revenues of listed stocks increase by 12.4%.

KARACHI: With clear signs of economic recovery, the growth of Pakistan’s consumer sector has remained stable in the first nine months (Jan-Sep) of calendar year 2014.

According to a report of Topline Securities that was released on Wednesday, a broader sample of consumer firms has posted stable sales and profitability growth in the above mentioned period.

The sales revenues of Pakistan-listed consumer stocks increased by 12.4% versus 12.2% growth in 2013. However, sales growth in the first nine months of calendar year 2014 remained slower than five years (2009-2013) Compound Annual Growth Rate (CAGR) of 17.2%.

Meanwhile, gross margins in the first nine months of calendar year 2014 stood at 25.7% compared to 27% in corresponding period of last year.



The bottom-line profitability increased by 17.9% in the above mentioned period compared to 11% in 2013. This profitability growth is in line with five-year (2009-13) profit CAGR of 17.3%.

In the first nine months of 2014, profit margins increased by 37 basis points (bps) to 7.9%.

For performance evaluation, a diversified sample of 47 consumer firms was selected with the aggregate market capitalisation of Rs1.5 trillion ($14.9 billion) that makes up 21% of total market capitalisation of Karachi Stock Exchange (KSE).

The sample includes food, beverages, pharmaceuticals, tobacco, footwear and personal care items producers.

Consumer stocks gained 42% in 2014 year to-date compared to KSE-100 Index return of 22%. In 2013, these consumer stocks massively outperformed by posting return of 85% compared to 49% of KSE-100 Index.

Within the sample of consumer stocks, Exide Pakistan, Akzo Nobel Pakistan, Hum Network, IBL HealthCare and General Tyre and Rubber Company were star performers with gains of 318%, 214%, 198%, 191% and 189%, respectively.

Market volume of consumer stocks is low in Pakistan. In 2014 year to-date, average daily turnover in these stocks was $7.3 million compared to an average daily turnover of $86.1 million at KSE.

Engro Foods was the most traded stock in the sample with $1.7 million average daily turnover in 2014 year to-date.

Published in The Express Tribune, November 13^th, 2014.

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