Corporate results show healthy growth in profits, demand

KARACHI (November 12 2002) : The corporate results announced at the Karachi Stock Exchange (KSE) for the quarter ended September 30, 2002, showed tremendous and healthy outcome where revenues/sales and profits growth boosted sharply as compared to same period last year.

Most, if not all, listed companies have released their results for the Jul-September 2002 quarter. An encouraging observation from these results is that the overall profitability of the corporate sector has shown growth when compared with the corresponding period of last year, both in terms of profits and demand.

A favourable economic scenario this time around with lower interest rates, general rise in demand, and a stable rupee (favourable for some) allowed the listed companies, such as PTCL, Levers and the banking giants, to portray better results.

Khalid Iqbal of Invest Capital Securities said that looking at the performance of the banking sector, it is evident that the group has observed a marked growth in profitability this time around.

MCB and Askari have managed to show healthy bottom lines as a direct result of huge deposit growth and lower taxation despite declining interest rates. Profitability growth over Jul-Sep 2001 has been 79 percent and 24 percent respectively. NBP has also shown extraordinary profit growth due to above-mentioned reasons, supported by reduced amortisation costs.

The highly leveraged companies, eg PTCL, Sui Northern, Sui Southern, DG Khan Cement, etc. have all managed to show a marked decline in financial charges owing to availability of financing at a lower cost. This, in turn, has provided a boost to profitability of these companies.

Another encouraging sign has been the willingness and ability of consumers to demand more of these listed companies' products and services. For example, when compared with the corresponding period last year, cement consumption showed 12 percent growth, urea demand grew by 3 percent (Jan-Sep), gas sales for SSGC and SNGPL grew by a combined 6 percent, and petroleum products consumption grew by 1-2 percent to drive profitability for these sectors.

PTCL has shown enhanced revenues with lower tariffs depicting more call units consumed. Unilever Pakistan has also managed tremendous top line growth by fuelling demand through sales promotion schemes.

With rupee liquidity in the hands of consumers consistently on the rise, interest rates in the economy are likely to stay on the lower side. This rising liquidity is also expected to help in sustaining the rise in demand observed during Jul-Sep 2002.

The corporate sector can, therefore, look forward to maintain this good performance going forward.

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