ICI shrugs off the demons and moves on

The key in keeping the chemical business resilient is to adopt efficiency measures and expand sales mix into various innovative products. And thats exactly what ICI Pakistan has been doing.
Beating the odds of weak consumer demand, depressed product prices, as well as high production cost arising from a depreciating rupee, the firm still managed to maintain its topline in the twelve months ended December 2009.
Driven by higher volumetric sales and lower feed stock, PTA & MEG, prices, the companys polyester sector outshined the others during the year. The 9 percent hike in PSF sales is attributed to an increased demand, after textile makers shifted towards polyester when cotton prices started racing exponentially during the period.
The boost in bottom-line profits, however, came from higher other operating income, which more-than-doubled to Rs459 million, on account of greater cash and bank balance and the writing back of about Rs100 million worth of provisioning booked in 2008.
Net earnings also rose on the back of lower financial charges, which fell 24 percent, as the firm booked lower exchange losses amid improved cash position.
While poor economic condition and weak industrial growth created hurdles for the company to realize its full potential last year, indicators suggest that a possible recovery in major industries, such as auto, textile, construction, etc, will help the ICI to resume high growth in the years ahead.

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ICI Pakistan

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Rs (mn)                           2009        2008      %chg

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Net sales                       28,429      27,798        2%

Cost of sales                   22,754      22,303        2%

Gross profit                     5,675       5,495        3%

Gross margin                        20%         20%       1%

Admin & general exp              1,178       1,126        5%

Selling & distribution exp       1,470       1,317       12%

Other operating income             459         213      115%

Finance charges                    167         219      -24%

PAT                              2,044       1,862       10%

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Source: KSE Announcement