PSX-listed companies break earnings record in Q1

KARACHI: Companies listed on stock market posted highest ever quarterly profits of Rs243 billion in the first quarter of this year, up 82 percent year-on-year and 11 percent quarter-on-quarter, a brokerage reported on Monday.

Of them, start-run companies saw profit increase 15 percent year-on-year and 33 percent quarter-on-quarter, while privately managed companies’ earnings improved by 119 and 5 percent. Private companies outperformed government companies during the outgoing quarter.

Government companies outperformed private companies due to exceptional profits posted by Bank of Punjab, Oil and Gas Development Company, Pakistan State Oil, and National Bank of Pakistan.

In Q1, the largest contributors to KSE-100 profitability were oil marketing companies (OMCs) followed by fertilisers, cements, banks and chemicals. Top contributors were banks, OMCs, exploration and production (E&P), cements, and textiles, said analyst Shankar Talreja at Topline Securities, basing estimates on data of 94 companies which represent 98 percent of KSE-100 market capitalisation.

Energy sector was severely impacted due to COVID-led lockdown as oil prices touched new lows amidst sinking demand.

“This resulted in heavy inventory losses to OMCs in Pakistan. Due to low base effect, OMCs emerged as star performers in 1Q2021, contributing an additional Rs21 billion in profits,” said Talreja.

Fertiliser sector contributed additional profits of Rs17 billion mainly led by Engro Fertilizer and Engro Corporation. Engro profits increased due to rise in profit of Engro Fertilizer and Engro Polymers and Chemicals.

Cement sector turned in profits of Rs15 billion compared to loss of Rs2 billion a year earlier, resulting in additional contribution of Rs17 billion. Turnaround in sector was attributed to sharp increase in retention prices by more than 30 percent and decline in finance cost by over 40 percent.

Banks added Rs15 billion to profits mainly due to increase in net interest income on the back of increase in deposits by 18 percent, highest in 14 years. Furthermore, provisions of the sector also declined by 59 percent.

E&P companies performance remained dismal in 1Q2021 owing to increase in exploration costs and hefty exchange losses due to currency appreciation by Rs7 to USD. The sector reduced KSE100 profits by Rs13 billion. Pakistan Oilfields posted largest decline of 46 percent due to decline in hydrocarbon sales by 10 percent and heavy exchange losses compared to exchange gains in 1Q2020.