ICI: determined despite challenges

ICI Pakistans latest financial results affirm the benefits of not putting all your eggs in one basket. The firm recorded year-on-year growth of 17 percent in the bottom line, while revenues surged to Rs26 billion from Rs21 billion over the same period last year.
This growth is broad-based, with all sectors, including soda ash, paints and PSF having recorded an overall increase in turnover.
In the first half of the current calendar year, rising PSF prices helped the sector furnish the highest turnover of Rs8.4 billion. In the absence of the detailed accounts, it is believed that price-led growth in PSF continued in 3QCY10, helping push profits up.
Soda ash, another prominent, energy-intensive sector for the company, remained under stress, despite an underlying growth in the third quarter. Gas shortages, which peaked particularly in the third quarter this year, are largely to be held responsible.
Before one cheers for the year-on-year gains, a quarterly comparison deserves a glance. Results were a tad disappointing on a quarter-on-quarter comparison, whereby the top line depicted a 6 percent decline for 3QCY10, while profits plummeted by 11 percent.
The impact of the floods is believed to have disrupted overall commercial and industrial activity, hence affecting growth in the companys major indicators over the previous quarter.
The future outlook remains a challenging one for the company since gas loadshedding is expected to increase in the months to come. The PSF sector will probably continue with its star performance for the next quarter on the back of rising PSF prices and developments in global textile demand.
The company has been on its toes, having developed new paint products for the mid-market and refurbishment businesses, and having reestablished its previous alliance with the OEM sector.
Though generic macroeconomic challenges prevail, such strategic moves will help the ICI keep up its margins, and hence its shareholders confidence in the company.

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ICI P&L

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(Rs mn)                           9MCY10    9MCY09    chg

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Sales                             25,550    20,820    23%

Cost of sales                     20,635    16,606    24%

Gross profit                       4,915     4,214    17%

Gross margin                         19%       20%    -5%

Selling & distribution expenses    1,237     1,094    13%

Administrative expenses              805       781     3%

Other operating income               354       321    10%

PAT                                1,848     1,583    17%

EPS (Rs)                           13.31     11.40

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Source: KSE notice