ICI profits rise on PSF prices

ICI Pakistans resilient financial performance over the year underlines its fundamental strength. The companys net profits jumped 17 percent despite 3 percent fall in top line during the nine months calendar year 2009. The firms margins remained positive at 4 percent, while finance cost more than halved during the period. The company announced Rs 4.02 per share earning for quarter ended September.
ICIs gross profit remained flat, despite the fact that it faced problems in industrial segment due to termination of business agreement with Kansai - a high net worth foreign client - as well as declining auto sales. However, demand for soda ash and PSF - high margin products - enabled the firm to offset the impact of decreasing industrial sales, while appreciation in domestic PSF prices also supported its margins.
But the big push to bottom-line growth came from 66 percent decrease in financial charges owing to low cost of borrowing coupled with less working capital requirement during the period. Profits were also augmented by 92 percent increase in other income for January-September 2009.
The company has acquired AkzoNobel - the worlds largest coating supplier - in order to reap benefits through synergies and introduce new products in the lucrative paint segment. Despite the slowdown in economy, ICI has shown elastic performance with its diversified products mix and looks set to go a long way, led mainly by PSF and soda ash segment.

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ICI P&L

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Rs(mn)           3QCY09   3QCY08   (+/-)%    9MCY09   9MCY08  (+/-)%

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Sales            6,935    7,512       -8%   20,820   21,488      -3%

COGS             5,419    6,041      -10%   16,606   17,316      -4%

Gross profit     1,516    1,471        3%    4,214    4,172       1%

Gross Margin        22%      20%      12%       20%      19%      4%

Operating Exp      893      903       -1%    2,339    2,458      -5%

Finance cost        44      174      -75%      121      357     -66%

Other Income        91       60       51%      321      167      92%

L/PBT              819      728       13%    2,344    2,090      12%

Taxation           262      253        4%      761      733       4%

L/PAT              557      476       17%    1,583    1,357      17%

L/EPS(Rs)         4.02     3.43         -    11.40     9.78        -

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Source: Company Results
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