OGDCL profit drops to Rs28.3bn in first quarter

Published October 30, 2014
The company’s profit was Rs33.6bn (eps: Rs7.81) in the same quarter of last year. — File photo by AFP
The company’s profit was Rs33.6bn (eps: Rs7.81) in the same quarter of last year. — File photo by AFP

KARACHI: The Oil and Gas Development Company Limited’s (OGDCL) after-tax profit for the first quarter of this fiscal year dropped 15.7 per cent to Rs28.3 billion, translating into earnings per share (eps) of Rs6.58.

The company’s profit was Rs33.6bn (eps: Rs7.81) in the same quarter of last year.

Its Board recommended final cash dividend at Rs2.50 per share.

Also read: OGDCL earns record Rs124bn in FY14

Analyst Muhammad Affan Ismail at BMA Capital Management believed that the results were below consensus estimates, due possibly to higher-than-estimated exploration expenditure and above-expected effective tax rate at 32pc.

Analyst Vahaj Ahmed at brokerage Topline Securities noted that the net sales rose by 3.4pc to Rs64.4bn against Rs62.4bn in 1QFY14. However, surge of 28.2pc in operating costs resulted in lower gross profit, which the analysts thought to be due to higher amortisation/impairment costs on development and production assets following reserve evaluation.

Moreover, decrease in other income was recorded mainly due to lower exchange gain on dollar-based TDRs as a result of relatively stable Pak-Rupee.

Engro Corporation: On a consolidated basis, Engro Corporation recorded a 14pc increase in revenue to Rs122.4bn for the first three quarters of 2014, from Rs107.8bn during the same period last year.

In a statement released following the meeting of the Board on Wednesday, Engro stated that the increase in revenue was mainly driven by higher fertiliser sales at Engro Fertilisers and Engro EXIMP coupled with a recovery in sales volumes at Engro Foods and power generation businesses.

Despite the increase in revenue, Engro’s after-tax profit stood at Rs4.44bn compared to Rs5.73bn in 9M2013. “This was mainly due to the turbulence in the international commodity prices which affected the Ethylene-PVC price delta in the petrochemical business, AMF inventory in the foods business and the selling prices of rice coupled with an unprecedented appreciation in the Rupee-dollar exchange rate,” the company stated.

The company’s flagship fertiliser business continues to demonstrate improved performance as both plants receive temporary gas allocation of 60 million standard cubic feet per day (mmscfd) from Mari. This has directly resulted in increasing sales that have registered an upsurge by 24pc consequently increasing the market share of the company to 32pc for the first three quarters of 2014 against 26pc during comparative period of last year.

The company’s foods business achieved revenue growth of 11pc over last year but gross profit percentage reduced from 25pc to 19pc due to higher milk prices which were not passed on to consumer due to market environment and consumer promotions to boost sales.

The chemical handling and storage business – EngroVopak – continued to reflect strong performance and recorded revenue of Rs1.55bn and profit after tax of Rs1bn during January-September.

Fauji Fertiliser (FFC): The company announced net profit after tax (NPAT) at Rs12.9bn, turning into earnings per share at Rs10.19 in 9MCY14 on a consolidated basis.

It stood down by 13pc year-on-year (YoY) over R14.8bn (eps: Rs11.71).

In addition to this, 3QCY14 result was accompanied by interim dividend per share at Rs3.75 which along with interim dividend at Rs6.40 paid earlier takes 9MCY14 payout to Rs10.15.

In 3QCY14, the company recorded NPAT of Rs4.8bn (eps: Rs3.77), up 33pc against Rs3.6bn (eps: Rs2.83) in 2QCY14.

Gross margins declined due to the inability of the company to fully pass on the increase in GIDC costs, even though net sales amounted to Rs55.03bn in 9MCY14, which represented 5pc growth over Rs52.5bn. Other income jumped by 495pc due to income from FFBL and AKBL.

Nishat Mills Limited (NML): The country’s largest textile mill announced 1QFY15 unconsolidated earnings at Rs400m (eps: Rs1.14), representing a significant fall of 74.5pc over the profit after tax at Rs1.6bn (eps: Rs4.47) a year earlier.

Analyst Muhammad Tahir Saeed at Topline Securities stated that the sales of the company declined by 5.9pc to Rs12.8bn compared to Rs13.6bn in 1QFY14.

Cost of sales increased by 2.8pc to Rs11.4bn in 1QFY15. Thus, gross profits slipped by 44.3pc to Rs1.4bn while gross margins stood squeezed to 10.9pc in 1QFY15 from18.4pc in the same quarter last year.

Nishat Chunian Ltd (NCL): The company recorded on unconsolidated basis a loss after tax (LAT) at Rs238m, or loss per share at Rs1.19, in 1QFY15, down by 2.1 times year-on-year.

Analyst Numair Ahmed at Arif Habib Limited observed that net sales slightly picked up by 3pc YoY to Rs5.31bn in 1QFY15 which was lower than initially expected. Gross margins clocked in at 7.6pc, a decline of 610bps when compared on YoY basis primarily due to continuing inventory losses from 4QFY14, rising energy costs and under-pressure yarn margins.

Published in Dawn, October 30th , 2014

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