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In the first nine months of fiscal 2013, DG Khan Cement, a unit of Nishat Group, doubled its unconsolidated earnings to Rs4.24 billion compared to Rs2.072 billion in the corresponding nine-month period of fiscal 2012, …..Efficient cost control measures by DG Khan Cement played a major role in stellar results as cost of sales remained virtually flat, resulting in full impact of the growing top-line on earnings. Depreciation of the rupee also proved to be a blessing in disguise for the company’s export markets. Revenues for the country’s second largest cement producer topped at Rs18.13 billion, growing 8.6% compared to Rs16.7 billion in the same period of last year. Cost of sales rose 1% to Rs11.305 billion, resulting in gross margins to climb 470 basis points to 37.7% from 33% in the corresponding period of last year, with the commencement of DG Khan’s waste heat recovery plant and falling international coal prices. As the State Bank of Pakistan slashed the benchmark interest rates by 250 basis points during the period to 9.5%, financial charges of the company dropped 38.5% to Rs0.802 billion from Rs1.3 billion in the same period of last year. Additionally, 22% higher dividend income from associates – MCB Bank, Nishat Chunian and Nishat Mills – to Rs1.085 billion boosted the bottom-line of the company.
…. DG Khan Cement Director Marketing Fareed Fazal said that the cement producer is planning to expand to India despite non-tariff barriers put up by the Indian market.“We have a plan to invest $10 million in setting up cement silos along with a mixing plant in India,” said Fazal. DG Khan also plans to pack the cement in India and sell it directly to the market from its planned facility on the Indian side of Wagah-Attari border….Moreover, the cement producer has also explored other potential export markets, which included South Africa, Mozambique, Ethiopia, Djibouti, Tanzania, Kenya, Sudan, Congo and West Africa. In Asia, the company is developing channels in Sri Lanka, India, Myanmar, and Tajikistan. "In spite of this being the election year and all other unfavourable conditions, we are still projecting growth of two to three per cent,” said Fazal…. EXPRESS TRIBUNE
The Hub Power Company (Hubco) announced its financial results for the first half of fiscal 2013 on Wednesday, beating analyst estimates to post earnings of Rs4.77 billion (Rs4.12 earned per share). The profit announced is 59% higher than the Rs3 billion the company earned in the first half of fiscal 2012. On a quarterly basis, the company posted earnings of Rs2.63 billion. Along with the result, the company has announced an interim dividend of Rs3.5 per share, ….Hubco is engaged in the electric utilities industry. The company owns an oil-fired power station with an installed net capacity of 1,200 megawatts (MW) at Mouza Kund, Hub, in Balochistan; and a 214 MW net capacity oil-fired power station at Mouza Poong, Narowal, in Punjab. The company also has a 75% controlling interest in Laraib Energy, a subsidiary that is developing an 84 MW hydel power plant.
Analysts pointed out that the company realises a generation bonus in the first half of every fiscal year, which propels earnings in the second quarter. “We believe the company realised Rs.417 million as a generation bonus in the first half of fiscal 2013 (1HFY13),” Shaikh said. In the second quarter of every fiscal year, Hubco receives generation bonus for attaining higher utilisation levels (above 65%) of its old Hub plant. This bonus is calculated on the basis of calendar year generation numbers.The company saw finance costs decline 7% in the December quarter over the preceding quarter as the National Transmission and Despatch Company and the Water and Power Development Authority made timely payments for their purchase of power from Hubco.
Outlook : “Going forward, Hubco’s next leg of growth is to come from the Laraib hydel plant, which is scheduled to come online in fiscal 2014,” ,,,,Laraib will be the first 84 MW independent hydroelectric power plant in Pakistan. The project is expected to be completed within the scheduled time, … “Based on our discussion with the management, we do not foresee any significant capital expenditure to be done by Hubco, as the plant remains in perfect working condition. Moreover, the management signals no downside on commercial availability of the power plant (as capacity payment receipts are linked to plant’s availability for power generation). Therefore, we rule out any near term negative impact of this event on Hubco’s profitability,” …. Express Tribune
The only trillion-rupee company of the country, Pakistan State Oil (PSO), announced a 37% growth in profitability for the half year ending 31 December, 2012, mainly on account of volumetric growth coupled with higher fuel prices in the country. Moreover, a significant increase in other income supported the bottom-line…. the state-owned megacorporation reported a profit of Rs6.3 billion in the first six months of the fiscal year 2012-13, against a profit of Rs4.6 billion in the corresponding half of the preceding year. Keeping in view the circular debt and the position of the PSO balance sheet, the company’s board of directors, in a surprising move which no one anticipated, approved an interim cash dividend of Rs2.5 per share equivalent to a 25% return along with a bonus issue of 20%….
In the period under review, the net sales recorded an 8.5% increase, owing to growth in volumetric sales amid higher POL prices. However, Shajar Capital estimates that volumes declined 3% and the top-line growth was primarily driven by an average 29% year-on-year increase in POL prices. Resultantly, gross profits managed to climb 10% to Rs18.1 billion from Rs16.3 billion despite stagnant gross margins. In the semi-annual period, industry’s volume for black oil decreased 5%, whereas white oil grew 2% reflecting an increase in PMG consumption of 14% and a 2% decline in high-speed diesel’s demand. PSO’s overall market share stood at 64.6% for the period. The oil marketing giant realised a benefit to the tune of Rs70 billion as a result of the term finance certificate issued by the government in September 2012 to control the spiralling circular debt. This led to a drop in payables to local refineries by Rs70 billion and likely resulted in financial charges, including penal interest, going down 44% in the second quarter. However, the financial charges in the July-December period surged 12% to Rs4.5 billion…. Express Tribune
Fauji Cement reported a profit of Rs0.923 billion for the first half of the current fiscal year, switching to black from a loss of Rs0.102 billion in the corresponding half of the preceding year. On a quarter-to-quarter basis, the cement producer’s profits accumulated to Rs0.562 billion in the second quarter of fiscal 2013 against Rs.0.361 billion profit in the corresponding previous quarter, up an impressive 56%.
2012 has been really good year for the cement industry in general as higher cement prices and softer coal prices have propelled profits of the highly-leveraged sector. Despite stagnant exports, the industry has more than made up for the losses through higher local dispatches amid higher prices. Revenues clocked in at Rs.7.567 billion in the semi-annual 2012 period, up an astounding 77% compared to Rs.4.257 billion in the corresponding half of last year. The astounding boost was solely driven by selling prices which surged 13% to Rs.465 per bag in the south zone and 8% to Rs.438 in the north. On a sequential basis, the company posted revenues of Rs.4.103 billion in the second quarter against Rs.3.464 billion in first quarter of fiscal 2013, up an 18%. Fauji’s total cement dispatches stood at 662,000 tons in the second quarter, where local dispatches increased 22% to 520,000 tons and exports relatively stable during the quarter,…
Gross margin is the number to look at as Fauji Cement managed to boost its margins to 35% during the quarter from 19% in the corresponding quarter of last year, primarily on the back of higher cement prices and falling international coal prices, which declined 27%, and aggressive use of the refuse derived fuel, a cheaper alternative top coal as kilning fuel. Gross margins for the semi-annual period of fiscal 2013 also were at an impressive 32.2%. On the flipside, the company’s finance cost climbed 15% to Rs.0.818 billion despite declining interest rates. …..Going forward, the cement industry is expected to have another great year as the demand for cement in Pakistan will continue to grow at the current pace of 7.6% as government spending is expected to rise due to upcoming elections. Moreover, exports to Afghanistan and African markets will continue to rise in the future.Furthermore, analysts believe that Fauji Cement’s stock will witness a further upside, despite forward price-earnings of 4.9 times, as the company has an influence on the pricing of the product in the market…. EXPRESS TRIBUNE
After the announcements of the earnings of Engro Foods and Engro Fertilizers, the market largely knew what to expect, but it was still grim reading: revenue increased a paltry 8.7% (below inflation) to Rs125 billion and profits plummeted 83% to Rs1.3 billion. The overwhelming bulk of that decline can be attributed to the fertilizer manufacturing business, which went from a Rs4.6 billion profit in 2011 to a Rs2.9 billion loss. Excluding the losses from Fertilizers, the conglomerate saw its revenues increase by 13.5% and its profits by a much healthier 22.9% during the year ending December 31, 2012. So anaemic is the fertiliser business that it is no longer the largest business: 2012 also has the distinction of being the year that Foods became, in every respect, the largest subsidiary of Engro Corporation. The North American subsidiary of Engro Foods – Al-Safa Halal – also registered a substantial revenue number for the first time, of around $11 million.
At the press conference announcing its results, however, Engro CEO Aliuddin Ansari spent the bulk of his time talking about the problems in the fertiliser business, specifically how the companywas able to get only 9% of the gas that the government is obligated – by sovereign guarantee – to provide the $1.1 billion plant in Dharki…. The new plant for Engro was financed largely through debt, which has been a particularly troublesome burden for the company in light of the amount of time the plant spends idle, and thus unable to generate revenues. During the course of 2012, the companyspent Rs13.6 billion in servicing its debt, including about Rs4.9 billion in principal payments.Ansari claimed that the government was being highly discriminatory in its attitude towards Engro, addingthat other fertilizer manufacturers – especially Fatima Fertilizer – were getting natural gas, even though both Engro and Fatima have identical agreements with the government.
Fertilizers may soon have at least some relief from the chronic gas shortages, however. The state-owned Oil and Gas Development Company, the largest oil exploration and development company in the country, signed agreements with several fertiliser manufacturers, including Engro, to sell them natural gas directly through its low-BTU wells, …Engro’s other businesses have begun to do well and have a significant impact on the company’s bottom line. Engro Vopak, its chemical storage business, had an net income of Rs1.5 billion. Engro Polymer & Chemicals finally swung to a narrow profit of Rs77 million after years of losses, and Engro Energy contributed Rs2 billion to the conglomerate’s bottom line…. Express Tribune
Engro Fertilizer, the Corporation’s unlisted but highest profit making unit for many years, reported a loss for 2012 of Rs.2.935 billion, primarily due to shutdown of the new plant. The fertiliser unit reported an astounding profit of Rs4.59 billion in 2011. “The loss on an annual basis is mainly driven from the shutdown of the new plant. However, in the final quarter of 2012 the Enven plant operated at over 80% capacity, leading to significant efficiency gains and partially contributing towards the fertiliser company achieving breakeven in the quarter,” commented Farid Aliani, an analyst at BMA Capital. This implied a fourth quarter profit of Rs0.043 billion for Engro Fertilizers. The government decided to divert 202 million cubic feet of gas per day from the dedicated Mari field controlled by the Oil and Gas Development Company to the fertiliser plants on the Sui network. Engro spent $1.1 billion for building its Enven plant on the Sui Northern Gas Pipelines network. Engro’s Enven is the world’s largest single-train ammonia-urea plant with a production capacity of 1.3 million tons per annum…. the Enven plant received gas for only 45 days in 2012, …. Engro Fertilizers’ net sales shrunk 2.5% to Rs30.626 billion during the year compared to Rs31.353 a year ago, mainly due to the fall in production. … the company’s urea production fell 22% to 977,000 tons in 2012. Though, the last quarter saw considerable improvement in production, clocking in at 270,000 tons, up 45% quarter-on-quarter, it was no match to the losses borne by the company throughout the year. Apart from enhanced production, urea sales also improved during the quarter, growing 76% to 345,000 tons, helped by bumper industry sales during the Rabi season.
Excessive gas curtailment besides gas infrastructure development cess (GIDC) also forced Engro Fertilizers’ margins to shrink to 32% for the year, squeezing from 53% in 2011. The company managed to make a gross profit of Rs.9.9 billion, where the cost of sales incurred were Rs.20.77 billion. Though the GIDC has been declared illegal recently, the fertiliser producer paid the tax for the full year, which is Rs197 per million British thermal unit (mmbtu)and Rs50 per mbtu on feed and fuel gas on the fertilizer sector, …Financial charges grew 40% to Rs10.7 billion, the other big reason for pushing the company into the red zone. …Engro Fertilizers enjoys a 16% market share of the urea and the di-ammonium phosphate market. The parent, Engro Corporation, is claiming Rs.34 billion in damages from the SNGPL for breach of sovereign contract promising supply of gas to the diversified conglomerate’s fertiliser plant…. Express Tribune
MCB Bank, Pakistan’s fourth largest bank by assets, has made a profit of Rs.20.94 billion in 2012, reporting modest growth of 8%, from Rs.19.42 billion earned by the bank in
2011 mainly on the back of bad loans shrinking to one-fifth. Provisioning expenses dipped 87% to Rs478 million from Rs3.65 billion a year earlier, emerging as the key profitability driver…Analysts second the claim as they believe the decline attributes to prudent management of the bank, as it has done subjective provisioning which is resultingin reversal and stagnation in non-performing loans and improving asset quality.The board of directors.. announced a dividend of Rs3 per share, taking the total payout for the year to Rs13 per share. The payout ratio currently stands at 57% for 2012. The bank also announced a bonus share issue of 10% along with the results. In 2012, the State Bank has been continuously, in its monetary policy announcements, tightening banking margins in order to push them toward greater lending to the private sector and stimulate growth in the economy, which has hit MCB’s net interest income – the bank’s core earnings. Banking sector’s average spread for 2012 was recorded at 7.02% against 7.63% in 2011, ….
Net interest income declined 8% to Rs40.86 billion due to a moderate interest rate environment and relatively higher funding costs due to the enhanced floor on saving accounts. Though, the bank’s core revenue stream posted decline, MCB was able to absorb the falling revenues by cutting its provisional expenses considerably. Other key income streams that supported the bottom-line was an growth of 13% in the bank’s non-interest income to Rs.9.15 billion, as the company was able to record a 16% growth in fee, commissions and brokerage income. Apart from fees and charges, a strong share of profit from associate, Adamjee Insurance Company, added to non-interest income of the bank. With non-interest expense ending flat at Rs17.5 billion, non-interest income was able to transfer the whole growth into the bottom-line. For 2012, MCB Banks’ return on assets came to 2.95%; return on equity was recorded at 25.07% and book value per share improved to Rs.95.84…. Express Tribune
Pakistan Petroleum Ltd (PPL), the country’s second largest oil & gas explorer, reported a growth in profitability by 11% to Rs22.317 billion for the first half of the fiscal year 2012-13,mainly on the back of growth in its top-line, …. the board announced an interim dividend of Rs5 per share for the period,…A significant increase in field expenditures and lower than estimated other income were the prime factors behind the lower earnings.The growth in profitability in the period was primarily driven by stellar oil production (mainly from non-operated areas),coupled with higher well-head prices on uncapped fields,…Net sales of the explorer climbed 12% to Rs50.7 billion on account of robust production from the Nashpa and Tal blocks, despite lower gas production. Moreover, 12% higher wellhead gas prices, higher Arab Light crude oil price, coupled with a 9% depreciation in average rupee prices during the period contributed to the double digit revenue growth.
A 13% increase in other income to Rs3.9 billion on account of healthy investment positions, coupled with a notable reduction in other expenses (down 18%) contributed significantly to earnings.On the flipside, remarkably higher field expenditures of Rs13.7 billion on account of expanding exploration activity in PPL’s and joint-ventures’ blocks severely dented the bottom-line, forcing it to miss market’s expectations….PPL has recently announced oil and gas finds at Nashpa-3, Mamikhel-2, Manzalai-9 and Makori East-2, a combined oil and gas production potential of 10,400 barrels and 83 million cubic feet of gas per day. Adjusting for PPL’s stake, these finds provided 32% and 2% upside to the explorer’s volumes respectively.Beyond the first half of fiscal 2013, PPL will carry its profitability momentum through robust volumetric growth, driven by full wing production from Nashpa and Tal blocks, steady oil prices which are already up 4%, and further depreciation of the rupee. However, above expected decline in the Sui field and a probable secondary offering by the government remain key downside risks.
The government intends to offload 2.5% of its shareholding, with a possibility of an additional 2.5% as a green shoe option, where it can sell more shares if the offering is oversubscribed…PPL’s stock trades at price-earnings ratio of 6.1 times, at a steep discount to the 6.9 times at which the sector stands at…. Express Tribune
Engro Foods – Engro Corporation’s cash cow – posted a profit of Rs2.595 billion for 2012, up 191%, led by the dairy and beverages segment. Engro’s star performer witnessed a staggering three-fold increase in its earnings…..On a quarter-to-quarter sequential basis, Engro Foods saw its profit climb 102% to Rs977 million compared to the corresponding quarter of the previous year.Revenues climbed 35% to touch the Rs40-billion mark from Rs29.859 billion a year earlier,….Higher prices and volumetric growth coupled with padding from other income resulted in a stellar full-year profit, ….The performance was above expectations, mainly due to the fact that gross margins for the final quarter clocked in at 28.1%, the highest in the company’s history, compared to an average of 24.8% in the preceding three quarters. Moreover, other income rose 79% to Rs0.382 billion supporting the volumetric growth. On a quarterly basis other income grew 97% to Rs.0.14 billion….The company’s financial expenses meanwhile declined by 14% as compared to the previous year to Rs1.1 billion, indicating lower debt-financed capital expenditure spending….
The dairy and beverages segment recorded revenue of Rs37.37 billion and a profit of Rs0.478 billion. The segment thus contributed 93% to Engro Foods total revenues of Rs40.17 billion. The ice cream and frozen desserts segment, however, was not so lucky, as it showed a volumetric contraction of 3%. Despite this, the division posted sales of Rs2.8 billion and a loss of Rs0.41 billion….Going forward, the company’s dairy segment will continue to be the main revenue driver, specifically the company’s strong domination in the packaged milk through its flagship Olpers brand, whereas growing market share in tea creamers through its Tarang brand will support bottom-line growth.
Six out of Engro Foods’ seven products – Olper’s, Olper’s Lite, Olfrute, O’more, Omung, Omung Lassi and Tarang – are dairy-related. Analysts expect Engro Foods to stay in lead in terms of market share in packaged milk and tea creamers, which was estimated to be 55% and 75% respectively. Engro Foods itself boasts of over five million consumers that use its products nationwide daily….Express Tribune
Fauji Fertilizer Company (FFC) announced a profit of Rs20.839 billion for 2012, down 7% compared to previous year’s profit of Rs22.492 billion. FFC enjoys benefits of stable gas supply from Mari network, a huge competitive advantage over manufacturers operating on the Sui-based network…. the fertilizer producer’s board of directors announced a final cash payout of Rs.5 per share, taking the cumulative return on its shareholder’s investment to Rs.15.5 per share. FFC’s volumetric sales remained subdued throughout the year, clocking in at 2.4 million tons,… Despite flat sales volume, revenues managed to jump 35% to Rs.74.322 billion with climbing urea prices being the major revenue driver…..Impact of revenue growth was limited by a whopping increase of 84% in the cost of sales due to the company’s dampened ability to absorb fixed cost as a consequence of lower production levels. The cost of sales rose 1.84 times in comparison to 1.35 times growth in sales. Gross margins squeezed 14 percentage points to 48% in 2012 as the gas infrastructure development cess imposed in January 2012 was not passed on amid continuous demand-side pressures. Limited operating margins coupled with 27% higher distribution expenses, owing to higher transportation costs and salaries, resulted in operating profits to grow by a mere 2% to Rs30.4 billion.
…. FFC’s Achilles heel turned out to be the strong upsurge in financial charges along with absence of dividend income. Financial charges were up 27%, touching a billion due to higher leverage as the fertiliser producer borrowed to finance pending inventories piling up because of lower urea off-take. Other income declined 36% to Rs4.268 million, the drop is attributed to absence of dividend income from its subsidiary Fauji Fertilizer Bin Qasim Limited…. Express Tribune
Pakistan State Oil (PSO) has announced its earnings results for the first quarter of fiscal 2013 (1QFY13). The company has reported a net profit of Rs4.1 billion in 1QFY13, against a net profit of Rs2.4 billion in the same period of the preceding year. This translates into stellar 68% growth in the company’s profits, and earnings per share (EPS) of Rs20.35, against EPS of Rs12.08 in 1QFY12.The announcement beat street and analyst expectations by a wide margin; however, the company’s stock price is unlikely to appreciate much due to its decision to not declare a dividend along with the announcement, likely due to growing circular debt pressure on its cash flows.Topline Securities analyst Nauman Khan said the company’s increased profitability “is on account of higher gross level profitability and restricted ‘other operating expenses’.”
“A decline in ‘other operating expenses’ by 12% to Rs2.9 billion due to the absence of foreign exchange rate related losses, as against ‘other operating expenses’ of Rs3.3 billion last year, contributed to growth in the company’s bottom-line,” ….The company’s gross margin was higher by 90 basis points at 4.1% in 1QFY13, as against 3.2% in the same quarter last year, due to higher product margins on furnace oil, motor spirit and high speed diesel, and greater inventory gains. Furthermore, during the period, international petroleum product prices rose by an average of 23%.Thanks to higher margins and volumetric growth in sales, particularly in petrol and furnace oil, the company’s gross profit rose by 48% to Rs11.3 billion, as against Rs7.7 billion last year,…. Express Tribune
Lucky Cement profits solidified at Rs2 billion in the first quarter of fiscal 2012-13, up 34% from Rs1.5 billion in the corresponding quarter last year.The robust growth in profitability primarily stems from a billion rupees rise in revenues, improving gross margins and retention prices, austerity measures of the company to cut costs, lower coal prices plus savings from energy efficient measures, said BMA Capital Analyst Affan Ismail.Revenues climbed 18% to touch Rs2 billion in the period under review. Better cement prices in the local market, up 11% from a year earlier, coupled with improvement in local dispatches remained the major driving force behind considerable increase in the top-line, …However, the cement manufacturer’s volumetric sales were down 1% at Rs1.42 million tons, suffering because of lower export demand. Local dispatches were higher by 5% to 860 million tons while exports were down 9% to 563 million tons. But the company was able to enhance its revenue considerably mainly on the back of higher prices in the local market and rupee depreciation boosted income from lower exports, …Resultantly, gross profit registered a massive rise of Rs33% to Rs3.87 billion.
Gross margins also improved to 43.75% – the highest in the cement industry – led by better retention prices and several austerity measures. Positive effect of energy expense cutting measures like conversion of coal-fired plants to tyre-derived fuel and refuse-derived fuel manifested into higher gross margins. The alternate fuels decreased demand of the more costly coal by 20%. Moreover, apart from robust retention level, considerable dip in coal prices, down 22% to $82.32 per ton, supported uptick in margins.Operating expenses jumped 20% to Rs1.25 billion on the back of higher distribution costs over rising freight charges due to persistent increase in oil prices. On the other hand, financial charges went down 76% to Rs19 million as the cement producer is consistently loading off short-term and long-term debts from its balance sheet….According to the statements, the company had cash balance of Rs 3.3 billion as at September 30, 2012….. Express Tribune
National Bank of Pakistan (NBP) has posted its financial results for the first nine months of the current calendar year (9MCY12).On a consolidated basis, NBP’s earnings for the period have grown 10% year-on-year (YoY) to Rs12.72 billion, from Rs11.52 billion in 9MCY11…. the profit announcement has missed expectations due to lower-than-projected net interest income (NII) because of higher interest expenses incurred by the bank.Standout facts from the consolidated results include a 6% YoY decline in NII due to lower interest rates and enhanced floor rate for savings accounts. Other significant numbers include 13% YoY increase in non-interest expenses; a 32% YoY decline in total provisions driven by reversals in provision for diminution in the value of investments and lower loan loss provisions; and 27% YoY driven by robust dividends, foreign exchange earnings, capital gain income and share of profits from associates, …
“Last year where the bank incurred nearly Rs7.2 billion in provisioning expenses, this time provisioning reduced to Rs4.9 billion thanks to aggressive provisioning of the banks in last few quarters and restricted lending,” said Topline Securities analyst Farhan Mahmood. “Further, more than a 2.5 times increase in dividend income amid better payouts owing to resilient corporate earnings also supported the bank’s bottom-line,” …On a quarterly basis, NBP has posted a net profit of Rs3.43 billion for the third quarter of the current calendar year (3QCY12). The figure is flat on a YoY basis, but has plummeted nearly 22% over the previous quarter. The sharp decline came on the back of a 10% reduction in NII and lower capital gains and other income; even as the bank recorded 170% growth in foreign exchange income and recorded impairment reversals during the quarter…. Express Tribune
DG Khan Cement was able to switch its profitability from millions to billions – bouncing back into familiar territory for the cement producer and solidifying its position in the sector.The company’s results for the quarter were mostly in line with analyst expectations, who say that primary factors behind enhanced earnings were higher revenues, better margins, increased income from its associates and a lower effective tax rate.Profit for the country’s second-largest cement manufacturer swelled 4.5 times or 353% to Rs1.44 billion in the first quarter of the fiscal year 2012-13 from Rs317.8 million in the corresponding quarter of the previous year, ….Revenues enhanced by 15.5% to Rs5.87 billion in the period under review. The notable uptick in sales was attributed to hefty inflation in cement prices, up 11% from a year earlier, …Local dispatches grew 2.8% to 7.7 million tons in the first quarter of the fiscal year 2012-13 from 7.5 million tons in the corresponding quarter of the previous year…
Similarly, gross margins spiked up by 758 basis points to settle at 37.7% on the back of higher prices and new cost rationalisation measures from trial run of its energy-efficient Waste Heat Recovery and Refuse Derived Fuel plant during the period. Moreover, apart from robust retention level, a considerable dip in coal prices, down 22% to $82.32 per ton, supported uptick in margins. Resultantly, gross profits climbed to Rs2.21 billion….The bottom-line was also supported by the decline in financial charges by a sharp 33% to Rs303 million as against Rs449 million. Cement manufacturers were among the most highly leverage sectors in the economy, and with successive interest rates cuts by the State Bank of Pakistan by over 200 basis points over the last quarter, the company was able to substantially cut down its finance costs.The healthy earnings were also the result of a one-off tax reversal – which generally arises when tax relief is provided in advance of an expense – the company incorporated an effective tax rate of 5% against 43% charged in the corresponding quarter of the preceding year….. Express Tribune
Fauji Fertilizer Company (FFC) – one of the companies not affected by the gas suspension issue – posted a profit of Rs13.79 billion for the first nine months of 2012, flat compared to Rs13.83 billion in the corresponding period of the previous year. FFC enjoys benefits of stable gas supply from Mari network, a huge competitive advantage over manufacturers operating on the Sui-based network. Sui Northern Gas Pipeline-based fertilizer plants Agritech and Pak Arab Fertilizer received gas for 63 days each while Engro and Dawood Hercules Fertilizers received gas for only 33 days of operations in the first six months of 2012 and earlier, in September 2012, the SNGPL announced that it will be unable to provide gas to its network due to low gas pressure. Along with the result, the fertilizer manufacturer announced a cash payout of Rs2.5 per share, taking the taking total payout to Rs10.5 per share for the period under review,…
Revenues climbed 30% to Rs50 billion, attributable mainly to 35% increase in urea price over the period despite a 10% decline in urea offtake, …Data available for August showed a 44% decline in fertilizer offtake in the country to 448,000 tons, where urea offtake declined by 42% while di-ammonia phosphate (DAP) sales declined by 31%. The trend also continued in September where offtake further deteriorated with the arrival of imported fertiliser and the expectation of reduction in the urea price….
Gross margins were also hit adversely as it contracted by nine percentage points to 48% because of climbing gas prices, which went up a staggering 63% over the year, including the gas infrastructure development cess increase to 197 per million British thermal unit.Other major factors owing to decrease in company’s profitability were the climbing operating expenses and lack of other income.Financial charges shot up by 36% which can be linked to increase in short-term borrowings.On the other hand, other income contracted substantially by 35% to Rs2.8 billion from Rs4.4 billion mainly due to the absence of dividend income from its subsidiary Fauji Fertilizer Bin Qasim Limited…. Express Tribune
Fauji Fertilizer Bin Qasim Limited (FFBL) announced its earnings result for the first nine months of the current calendar year (9MCY12) … The company has posted a net profit of Rs2.13 billion, which is down by a whopping 70% year-on-year (YoY) if compared to the Rs1.17 billion net profit it posted for the same period last year. FFBL however has announced a better-than-expected dividend payout of Rs2.25 per share.
On a more positive note, however, the company’s profitability in the third quarter of the current year (3QCY12) has improved by a healthy 44% over the previous quarter. The sequential growth was underscored by robust DAP sales, which were higher by almost 196% over the previous quarter, …According to the 9MCY12 result, FFBL’s revenues have dropped 20% YoY primarily due to sinking urea off-take, which plummeted 42% as compared to last year. Furthermore, off-take of DAP fertiliser was also lower by 13% as compared to last year. Urea manufacturing has been highly disturbed this year, marred by low gas supply and lost markets due the availability of cheaper imported urea.
Raza Hamdani, investment analyst at Shajar Capital, expects FFBL’s DAP off-take to remain strong during 4QCY12, while he expects that demand for urea is also expected to revive after the dismal off-take witnessed in September due to flooding and price speculation. “Moreover, DAP primary margins may improve during 4QCY12 due to a recent downward revision in phosacaid contract price [a raw material used in production] by 4%QoQ,” he said.FFBL has also announced investment in meat export and processing business to diversify the company’s interests…. Express Tribune
Engro Foods has announced its earnings results for the first nine months of calendar year 2012 (9MCY12) today, posting a net profit of Rs1.62 billion for the period.The company has witnessed a staggering four-fold increase in its earnings, if compared to the more modest profit of Rs408 million it posted for the corresponding period of last year. The improvement is attributable to higher sales and improved gross margins over the year, …On a quarter-on-quarter (QoQ) sequential basis, Engro Foods saw its profits climb 13% to Rs601 million in the third quarter (July-September) of this calendar year, as compared to the Rs532 million it posted for the preceding quarter…..
“Going forward, we expect the dairy segment to continue to drive growth,” said Hamdani; referring to the company’s strong domination in the packaged UHT milk segment through its Olpers brand, and increasing market share in the tea creamers segment through its Tarang brand. Six out of Engro Foods’ seven products – Olper’s, Olper’s Lite, Olfrute, O’more, Omung, Omung Lassi and Tarang – are dairy-related.“We expect market share of Engro Foods in 9MCY12 in the UHT and tea creamers segments at 55% and 72% respectively,” Hamdani said. Engro Foods itself boasts of over 5 million consumers that use its products nationwide daily.
The Express Tribune had reported earlier that Engro Foods this year announced plans to invest Rs8.7 billion in expansion this year. Of this, Rs2 billion has been set aside for the powdered milk business, whereas the rest will be divided between cold chain infrastructure development, dairy capacity expansion and livestock acquisition…. Express Tribune
Fatima Fertilizer has posted a profit of Rs. 2.59 billion in the first six months of 2012 against a loss of Rs. 153 million in the preceding period primarily by selling more fertilizer. The Arif Habib Group subsidiary sold 170,000, 185,000 and 87,000 tons of urea, calcium ammonium nitrate (CAN) and Nitro-Phosphate (NP) respectively, showing 23% decline in urea sales whereas encouraging 13% growth in CAN sales on a yearly basis….Bulk of the sales came in June, more than making up for dismal sales performance in the first five months, ….The company is expected to perform better than its peers as it is provided protection by getting gas around 80% cheaper than rest of the industry for being a new player in the industry. The company is in its second year of operation…..The result is, however, lower than market estimate as analyst expected the bottom-line to be on average around Rs3.7 billion. Deviation from estimates primarily came from the topline where the company offered heavy discounts on products compared to peers in order to boost sales, …. Express Tribune
National Bank of Pakistan Limited reported a net profit of Rs8.2 billion in January to June 2012, up by a mere 1% on a yearly basis and much below market expectation. Higher provisioning against non-performing loans as well as reduction in value of investments are the key factors for this dismal performance, …Also, net interest income declined by 7% to Rs21 billion, whereas deferred taxation of Rs1.2 billion reduced the effective tax rate to 30%, supporting the bottom-line. Two key factors causing this decline are imposition of minimum 6% profit rate on savings accounts which accounts for 59% of the bank’s CASA and 200 basis points cut in discount rate during July to December 2012…. NBP’s asset quality has always remained a concern. Unlike its peer banks, despite an unpleasant economic landscape NBP has maintained higher than average advances to deposit ratio at 60% during the past few quarters….In the wake of the recent cut in discount rate to 10.5%, mark-up spreads for the entire banking sector are bound to decline. BMA Capital expects NBP’s earnings to decline in the range of 6%-16% during in 2012 and 2013, respectively. However, any aggressive shift in strategy of banks to extend advances amid long haunting energy crisis can be a game changer, …. EXPRESS TRIBUNE
The country’s largest conglomerate Engro Corporation reported a loss of Rs135 million in January to June 2012 following its largest subsidiary finding it hard to operate due to gas shortage. The new plant of Engro Fertilizers, the largest profit making subsidiary in 2011, operated for only 33 days due to gas shortage in the first six months of 2012. This, together with rising financial charges, pushed the company into losses for the second consecutive quarter.The manufacturer’s most recent balance sheet shows short-term borrowings in excess of Rs5.6 billion compared with negligible Rs4 million at the end of 2011, which explains finance costs exceeding street expectations and pushing the company into loss despite urea sales gaining three times on a quarterly basis.Finance costs of the conglomerate rose by hefty 95% to Rs8.6 billon, mainly on account of fertilizer subsidiary’s new urea plant. Fertilizer business contributed 66% to the financial charges but only 24% to revenue. The massive finance cost was the only reason which has pushed the company into loss, …
Engro Foods appears to be the silver lining for the conglomerate. The foods business continued its rapid growth trajectory registering a net profit increase of 368% to Rs1.02 billion in the period under review against Rs216 million during the same period last year. …The petrochemicals business switched to a net profit of Rs59 million for the six months ended June 30, 2012, compared with a loss of Rs195 million in the corresponding period last year mainly attributable to increased volumes and higher caustic prices. During the first half, Engro Qadirpur Powergen posted net profit of Rs1.07 billion due to higher gas efficiency and initiatives taken to ensure plant reliability and availability to the national grid. However, the substantial rise in the receivables due to circular debt is a major cause of concern for the business, the company said in a press statement. The subsidiary plant dispatched a total of 870.2 GWh to the national grid and demonstrated a billable availability of 100.8%.The chemical storage and handling business – Engro Vopak Terminal Limited (EVTL) – had smooth operations in the first half and posted a net profit of Rs673 million against last year’s Rs478 million during the same period last year…. EXPRESS TRIBUNE
Lucky Cement profits solidified at a record high Rs6.8 billion in fiscal 2012 on the back of higher local sales and better prices for the cement. The robust surge in profitability is primarily attributable to sharp uptick of 19% in local prices, lower coal prices plus valuable cost savings from energy efficiency measures and 7% increase in domestic sales, … Sales increased by 28.1% to Rs33.3 billion owing to 3% higher dispatches coupled with 25% jump in prices. Gross margins of the manufacturer augmented by 470 basis points to 38.2% compared with last year’s 33.5%. The result announcement was accompanied by a cash dividend of Rs6 per ordinary share of Rs10.
“Cement demand in the country is at its peak, I am hopeful that this will continue to grow and increase the business for the industry,” Lucky Cement Chief Executive Officer Muhammad Ali Tabba told The Express Tribune. The industry recorded sales of 23.95 million tons in financial year 2012, 3% increase over the preceding period. Lucky Cement’s domestic sales increased 7% to 3.7 million tons while export sales eased 4% to 2.3 million tons.The market share of cement export to Afghanistan has considerably increased and is expected to continue, the company said in a post-result statement. Moreover, there still exists cement export prospects to regional countries Sri Lanka and Iraq along with African country by sea routes….Strong pricing scenario, sale of surplus electricity to Hyderabad Electric Supply Company (Hesco) and Peshawar Electric Supply Company and robust cash generation capacity amid lowest debt in the sector will continue to remain the major value drivers for the company.
Lucky Cement led-group bought a 75.8% stake in ICI Pakistan from the Dutch paints giant AkzoNobel for Rs14.4 billion ($152.5 million) in the period under review….The company’s alternate fuel replacement plant that uses tyre derived fuel and residue derived fuel successfully started operations during the year, adds the notice. The alternate fuels decreased demand of the more costly coal by 20%.The plant would eventually utilise shredded tires as a replacement of coal for cement production.The plants costing Rs1 billion is located at the cement production facility in Karachi and is capable of producing cheaper cement along with reducing significant carbon emissions in the environment. Furthermore, the work on installation of grid station and 22km interconnection line with distribution network of Hesco was completed. The company is expected to start supplying 15 MW to 20MW to the electricity distributor between July and September 2012. The company is also plans to set up a one million ton manufacturing plant in Congo under a joint venture project. Lucky Cement will contribute $40 million towards 50% share of its equity in the project. Total cost is estimated at $175 million of which 46% which will be contributed by both partners while the rest will be raised from financial institutions…. EXPRESS TRIBUNE
The Oil and Gas Development Company, the country’s largest oil and gas explorer, profit surged 52% to Rs96.9 billion on higher oil and gas prices. Average net realised price of crude oil sold was 18% higher at $ 84.91 per barrel while the gas price was up 7% to Rs228.56 per million cubic feet. Net crude production remained flat at 37,615 barrels per day while net gas production rose 8% to 1,091 million cubic feet per day. The two combined rose overall revenue growth by 27% to Rs197.84 billion compared with Rs155.63 billion in the corresponding period last year. Also aiding revenue growth in will be the absence of a one-time downward revision of Rs15 billion in Kunnar crude oil pricing. The result was accompanied by a final dividend of Rs2.75 per share, taking the full year dividend to Rs7.25 per share. Other income almost tripled to Rs9.7 billion in the period under review from the preceding year’s Rs3.3 billion on the back of foreign exchange gains and higher interest income on cash balances…..Operating profit margin and net profit margin were 62% and 49% respectively. The explorer drilled 17 new wells during the year ended 30 June 2012. The exploratory efforts yielded two new significant oil and gas discoveries namely Nashpa-2 (Nashpa Exploration Licence) and Zin-X-1 (Zin E.L)….. Express Tribune
MCB Bank has made profits of Rs11.33 billion during January to June 2011 on the back of bad loans shrinking to one-fourth.Provisioning expense has fallen sharply by 81% to Rs400 million from Rs2.4 billion and emerges as the key profitability driver,….This decline is primarily from prudent management of the bank, as it has done subjective provisioning which is resulting in reversal and stagnation in non-performing loans, ….The board of directors meeting ….. on Tuesday also announced a dividend of Rs4 per share, taking the total payout to Rs7 per share. The payout ratio currently stands at 57% in the first six months, up from historical annual payout ratio of 50%.The State Bank of Pakistan’s move to increase minimum rate on savings account from 5% to 6% in May has hit the bank’s net interest income – the bank’s core earnings – hard.Net interest income declined by 6% to Rs20.9 billion during the period under review against Rs22.2 billion in the same period last year.
The bank has adopted a conservative strategy and channeled most of its growth in deposits towards investments particularly in government treasuries, …As a result during the first quarter, the bank’s net advances to deposits ratio (ADR) dropped significantly 45% from 56% in the same period last year. The resultant slow down in non-performing loan accretion is expected to lead a whopping 87% decline in provisioning charge during the period under review. Additionally, having provided for 81% of its non-performing loans the banks asset quality is termed best among its peers.Non-mark up income was a positive surprise, surpassing market estimates by 13% and depicting growth of 25% on higher fees and dividend income. Non-mark up expenses stood at Rs5.2 billion during January to June 2012 compared with Rs4.2 billion in the same period last year.The bank has booked capital gain on securities worth of Rs669 million and more than double dividend income of Rs797 million…..The stock has gained 51% in 2012 till date and outperformed the bourse by 22%. The stock received its latest boost from news that Mian Mohammad Mansha earlier this month said that he is keen to launch banking services in India….. Express Tribune
Fauji Fertilizer Company – one of the companies not affected by the gas supply issue – saw its net profit jump 26% to Rs10.34 billion in January to June 2012. Earnings came in higher mainly on account of significant increase in urea sales, ….Fauji Fertilizer Company (FFC) enjoys benefits of stable gas supply from Mari network, a huge competitive advantage over manufacturers operating on the Sui-based network. Sui Northern Gas Pipline-based fertiliser plants Agritech and Pak Arab Fertilizer received gas for 63 days each while Engro and Dawood Hercules Fertilizers received gas for only 33 days of operations in the first six months of 2012. The board of directors also announced their decision not to pursue the purchase of 9.99% stake in Agritech Ltd in lieu of the gas shortage faced by Sui-based fertiliser plants.
Along with the result, the fertiliser manufacturer announced an interim payout of Rs5 per share, taking the taking total payout to Rs8 per share, Revenue surged by 49% to Rs36.13 billion during the first half of 2012 on the back of higher urea prices and contribution from imported di-ammonia phosphate (DAP) sales,….. FFC urea sales stood at over at over 500,000 tons in June, offsetting the 38% sales decline witnessed in the first five months of 2012. Thus, cumulatively urea sales rose 6% to 1.2 million tons in the period under review.Urea prices remained volatile from April to June 2012 as strategic decision to announce a price cut for May along with an announcement of reversal of Rs50 per bag in June helped the company become competitive and make sales. The price decrease was needed to compete with imported fertiliser as it stood at a much lower price due to partial payment made by the government in the form of subsidies.However, gross margins stood at 47% during April to June 2012, posting a decline of 12.52 percentage points on a yearly basis due to imposition of Gas Infrastructure and Development Surcharge (GIDS) by 197 per mmbtu and net reduction of Rs100 per bag in urea prices during period under review…Financial charges shot up by 36% which can be linked to increase in short-term borrowing….. Express Tribune
