Lotte PTA profit rises

KARACHI: Lotte PTA’s earnings per share increased to Rs0.58, a 66 per cent rise against the same period last year.

This is according to the third quarter results for fiscal year 2010 released on Friday. Lotte PTA is Pakistan’s sole manufacturer of Pure Terephthalic acid, a product used to make clothing and plastic bottles. Lotte PTA’s profit rose to Rs873.1 million in the quarter ended March 31, up from Rs523.5 million a year earlier. Their sales increased to Rs9.74 billion from Rs7.12 billion a year ago.

Higher PTA prices, due to short supply, along with stable Paraxylene (Px) prices increased the company’s margins, said Topline Securities analyst, Furqan Punjani. He said that the company’s bottom line was further supported by higher ‘other income’ via bank deposits and lower financial charges. Lotte PTA achieved net revenues of Rs9.3 billion against Rs7.1 billion primarily due to higher PTA prices, said Punjani The company’s primary margins moved in tandem with international primary margins, PTA price minus Px price.

During the first quarter of 2010, international primary margins stood above $290 per ton versus $150 per ton in the same period last year. This is why the company’s gross margin was 14.5 per cent during the first quarter of the current year against 11 per cent in the same period last year. Due to improvement in liquidity, the company’s bank placement stood higher and hence other income on bank deposits rose to Rs258 million, stated Punjani. Similarly, financial expenses dropped to Rs59 million as compared to Rs108 million last year, down 46 per cent. PTA price is currently $960 to $970 per ton while Px is at $1,050 to $1,060, translating into primary margin of $250- 260, slightly lower than preceding quarter.

“We believe the margin for the full year 2010 to hover around $220-230 a ton, up from $175 a ton in 2009, 12 per cent lower than current margins due to increased supply going forward as regional capacities are expected to come online. However, any decline in duty protection from 7.5 per cent may cause the company’s profits to fall for the next year, said Punjani.