ICI Pakistan Limited (PSX: ICI) announced its financial performance for 1HFY21 last week with visible growth in profits and margins. What is more optimistic is that after weaker sales revenues in 1QFY21, the company’s topline posted a growth in 2QFY21, pushing 1HFY21 revenues also up.
Topline of ICI Pakistan Limited on a consolidated basis which includes ICI Pakistan operations including its Polyester, soda ash and chemicals, Agri sciences, pharma and animal health business segments as well as its subsidiaries ICI Pakistan PowerGen, and recently commissioned NutriCo Moringa (Pvt) Limited stood up by around 5 percent year-on-year in 2QFY21. Quarter-on-quarter growth in revenues was around 10 percent, depicting improving dynamics post the COVID-19 restrictions lifting. Though sales grew moderately, most of it came from pharma and animal health segment and addition of NutriCo Morinaga subsidiary.
2QFY21 also saw significant growth in gross profits and margins, which is expected to have come from better performance of PSF segment as evident from improving textile sector dynamic and rising demand and exports as highlighted by a research note by Arif Habib Securities. Gross margins grew by almost 400 basis points and 500 basis points on a year-on-year and quarter-on-quarter basis, respectively.
On the other hand, operating and net profits and margin grew due to lower finance cost due to lower interest rates and debt. Finance cost during 2QFY21 was down by 52 and 22 percent on year-on-year and quarter -on-quarter, respectively.
Overall, the consolidated earnings were up by 32 percent, year-on-year, while 2QFY21 bottomline grew by 53 percent year-on-year. Apart from growth in earnings, ICI Pakistan also announced a dividend of Rs20 per share as well as its expansion plans, which signal towards better prospects ahead in post COVID-19 recovery. In pursuing its ambitions to enhance total soda ash production capacity to 560,000 tons per annum, the board of directors of the company approved the additional 10,000 tons per annum capacity expansion taking existing capacity from 125,000 tons per annum to 135,000 tons per annum. The board also approved setting up a unit at its plant in Sheikhupura to produce 100 percent PET Recycled chip for the manufacturing of Recycled Polyester Staple Fiber for use in producing yarn for blended textiles, which will also bode well for rising textile sector export orders.