KARACHI, Aug 6: ICI Pakistan Limited announced Rs419 million after tax profit for the six months ended June 30, 2003, which represented growth of 85 per cent over taxed profit of Rs227 million in the corresponding period of the previous year.

The earnings brought pleasant surprise to the market as the figures emerged lot better-than-expected; most analysts had forecast profit to fall in the region of Rs300 million. The ICI stock thus gained Rs3.85 to close at Rs73.40 during trading on Tuesday, with a heavy volume of 42 million shares.

The company’s sales recorded an increase of 77 per cent to Rs9,830 million for the six months under review, from Rs5,566 million in the same time of 2002. Gross margin narrowed by 4.2 bps to 14.4 per cent. The company attributed the surge in turnover to the new furnace oil business and a high turnover low margin trading activity.

In a post-result review, Tanvir Abid, head of research at Jahangir Siddiqui & Co. observed that squeeze in ICI’s gross margins were attributable to lacklustre performance of the PSF segment during 2Q03. “PSF margins during the period remained under pressure ensuing from the descending trend of regional petrochemical prices and domestic PSF prices. Moreover, strong rupee and the domestic oversupply precluded a notable firming up of PSF prices,” Abid said.

ICI’s bottomline, nonetheless, showed strong growth due to 41 per cent decrease in financial charges, which stood at Rs195 million for the six months under review, from Rs332 million in the similar period of 2002. The analyst said that the financial charges had decreased on the back of renegotiation of company’s debt at lower borrowing costs, following the drastic decline in domestic interest rates.