ICI profit rises 25 percent in first quarter

KARACHI (April 26 2004): The profit of the ICI Pakistan Limited, in the first quarter ended March 31, 2004, rose 25 percent because of cut in selling and administrative expenses as well as low financial charges.

The ICI has announced its results for the first three months of FY04 with a first quarter profit after-tax of Rs 216 million (EPS Rs 1.55), the 25 percent increase from the corresponding period last year.

Despite a 15 percent sales decline, as expected, the ICI managed to increase its profitability due to Rs 54 million decline in selling and administrative expenses and lower financial charges.

Asif Ali, research analyst from First Capital Equities, believed that the ICI would be able to post an EPS of Rs 6.25 for the full 2004. A final dividend can also be expected taking the total pay out for FY04 to Rs 2.50 per share as compared to Rs 2.25 per share in FY03.

He said the effective management and debt re-profiling drove the profitability of the company. Despite the 15 percent decline in sales to Rs 4.221 billion as compared to the same quarter last year, the ICI managed to lower its selling expenses by Rs 55 million to Rs 372 million in Q1 of FY04.

This is a reversal of the trend that was continuing till the last quarter of FY03. Also, 35 percent decline in financial charges to Rs 78 million due to diminishing interest rates led the profitability of the ICI.

The principle contributor to ICI revenue generation proved to be its paints division. On the back of exponential growth in the auto sector and increased demand in decorative paints from housing and construction industry, there was a double-digit growth in the ICI Paints division.

PSF segment also shown improved performance as the sales in PSF sector climbed because of the demand in textile sector and increased PSF prices.

Profitability trend of the ICI in the coming quarter depends upon other industry dynamics. Paints division growth may continue as the government continues to postpone the import of reconditioned cars. Soda Ash, general chemical and life sciences segments are expected to remain under pressure while the performance in PSF sector will have a significant impact on the year-end profit of the company.

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