Pak Elektron’s earnings clock in at Rs2.6b

Nine-month profit up 65%, result below street consensus

KARACHI: Pak Elektron Limited that is known to consumers as PEL - the brand name for its famous range of refrigerators - boosted its net earnings by nearly two-thirds to Rs2.6 billion in the nine-month period that ended on September 30, 2015, according to a notice sent to the Karachi Stock Exchange on Tuesday.

A famous name in home appliances category, the company reported an after-tax profit of Rs2.6 billion or Rs6.6 per share during the period under review, up 65% compared to Rs1.6 billion or Rs4.5 per share it earned in the corresponding period of 2014.

The result, according to market analysts, was slightly below street consensus. However, the stock still ended up in the black, increasing 1.25% in Tuesday’s trading session. The company’s share, which traded at Rs76.15 the previous day, increased by Rs0.95 to settle at Rs77.1 at the close of market with more than 13 million shares changing hands.

“I think the market largely ignored this particular stock’s performance,” Taurus Securities’ Head of Research Zeeshan Afzal said referring to the increase in PEL’s share price despite the result, which was below expectation.

Afzal added some decline was expected because the refrigerator sales normally slow down in July-September quarter.

Refrigerators account for more than 90% of sales in the company’s home appliances division, which is about 45% of the overall revenue - power being the other division constituting the remainder of PEL’s revenue.

“PEL’s gross profits improved to Rs1.4 billion in the third quarter of 2015, up 5% year-on-year while its gross margins remained fairly stable,” Topline Securities said in its report. “We attribute stable gross margins to lower commodity prices (international steel and copper) during the quarter,” it added.

Published in The Express Tribune, October 28^th, 2015.

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