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PTCL earnings dip 29pc in 1HFY12

February 23, 2012

The company said it would remain focused on improving its operational efficiencies to counter those challenges. - File photo

KARACHI: Pakistan Telecommunication Company Limited (PTCL) announced unconsolidated profit-after-tax at Rs2.8 billion for the first half of FY12 (ended Dec 31, 2011), translating into earning per share (eps at Re0.56).

The earnings decreased 29 per cent from RsRs4.0 billion and eps at Re0.79 in the corresponding period of the previous year.

“The results were largely inline with our expectations,” commented Nauman Khan, analyst at Topline Securities.The company did not disclose consolidated earnings that would include the overall Ufone’s contribution to earnings of PTCL.

“Our preliminary assessment suggests that consolidated earnings would fall in the range of Re0.87-0.92 per share, down 20-24 per cent from Rs1.15 per share posted in the same period last year,” the analyst said.

The major reason behind subdued earnings in the period under review was the shrinking gross margins by 142bps to 26.1 per cent as compared to 27.5 per cent in the same period last year.

Company’s ailing fixed line operation stands as a major culprit behind reduced gross margin, analyst said.

Operating margins fell to 9.5 per cent, from 11.3 per cent. The decline in company’s ‘other income’ by 46 per cent to Rs1.7 billion in 1HFY12 as against Rs3.2 billion last year also assisted in dragging down the overall profitability.

In second quarter FY12, PTCL posted unconsolidated eps of Re0.28, showing a decline of 26 per cent as compared to Re0.38 in same time last year.

However, compared to the previous quarter (1QFY12), earnings improved by 8 per cent.

Furqan Ayub, analyst at brokerage, JS Global, observed that though the revenues grew by 6 per cent year-on-year (YoY) to Rs29.3 billion for 1HFY12, from Rs27.7 billion, but an unyielding cost structure accounted for an 8 per cent YoY rise in operating costs. Consequently, operating margins dipped by 180bps to 9.5 per cent from 11.3 per cent in the same time last year.

Financial charges increased to Rs133 million, from Rs127 million. Earnings further dampened with the sharp drop in ‘Other Operating Income’, in the absence of dividend income from Ufone.

Faisal Bilwani, analyst at Elixir Securities, said that investors remained anxious over future earnings outlook but took heart from the fact that the accounts did not include numbers from cellular subsidiary that might be revealed in a few days.

Indus Motors reports 95pc jump in earnings Indus Motors Company Limited announced results for 1HFY12 ended Dec 31, posting profit at Rs1.77 billion, converted to earning per share at Rs22.48.

The earnings represented a massive jump of 95 per cent, from Rs908 million (eps:Rs11.55) in the corresponding period of previous year. The board, which met on Wednesday, also announced an interim cash dividend at Rs8 per share.

According to analyst Syed Atif Zafar, the major reasons for growth in the company’s earnings were rise in net sales by 23 per cent YoY because of higher unit sales and increased prices.

Moreover, improved gross margins at 7.5 per cent, from 5.1 per cent in the corresponding period last year and rise of 25 per cent in ‘other income’ contributed to the stellar results.

“However on a quarter-on-quarter basis, the company’s profitability was down by 12 per cent in second quarter FY12 to Rs10.55 per share. The decline in earnings was stated to be due to lower unit sales on account of seasonality and decline in other income by 26 per cent QoQ,” the analyst said.

A statement issued by Indus Motors stated that the automotive industry had to face many challenges during the fiscal year 2012 which included managing severe supply disruption due to Thai floods together with steep rupee devaluation, increased cost pressures due to energy shortages and influx of used cars.

The company observed that during the half year, company’s sales grew by 6.3 per cent to 24,341 units compared to 22,903 units sold for the same period last year.

Correspondingly the production also increased by 3.5 per cent to 24,316 units as against 23,482 produced in the similar period of the previous year.

“The company’s combined sales revenue for CKD, CBU & Parts business amounted to Rs33 billion and the profit-after-tax stood at Rs1.77 billion on account of increased sales volume and cost efficiencies,” Indus Motors said in its statement.

The company added: “Going forward the challenges for auto industry will be depreciating rupee and resultant cost pressures, expiry of AIDP, correction in commodity prices which may impact rural buying, impact of ban on CNG cylinders and conversion kits imports and influx of imported used cars.”

The company said it would remain focused on improving its operational efficiencies to counter those challenges.