KARACHI: Inspite of economic challenges, KSE index companies’ after-tax earnings (PAT) have grown by 10 percent YoY to Rs 1.0 trillion in 2022 against last 5-years (2018-2021) average growth of 16 percent.
The slowdown in growth was primarily due to super tax imposed in 2022 to bridge government revenue shortfall, experts said.
However pre-tax earnings (PBT) of the KSE100 index companies increased by 34 percent YoY in 2022 to Rs 1.8 trillion against average PBT growth for the last 5 years (2018-2021) of 16 percent.
In US$ terms, PAT decreased 12 percent YoY to $5.0 billion in 2022 against last 5-Year (2018-2021) average growth of 5.0 percent, while PBT grew by 6.0 percent YoY to $8.8 billion in 2022 against last 5-Year (2018-2021) average growth of 5.0 percent.
To recall, in the FY23 budget, the Government imposed 10 percent super tax for 15 specific sectors with earnings in excess of Rs 300 million for tax year 2022 (FY22) with retrospective implementation.
Furthermore, 1-4 percent slab wise super tax was also imposed on sectors excluding specified sectors with earnings of Rs 150-300 million or above.
The increase in profitability was largely led by Oil & Gas Exploration (E&Ps) where profitability was up 33 percent YoY, Banks up 14 percent YoY, and Refinery up 272 percent YoY in 2022, Sunny Kumar, an analyst at Topline Securities said.
Other sectors like Technology, OMCs, and Foods, also gave major support during 2022, with YoY profitability growth of 63 percent, 11 percent and 18 percent, respectively.
On the flip side, Power, Automobile, and Engineering sectors reported decline in profits during 2022, with earnings declining by 59 percent, 45 percent and 68 percent YoY respectively.
In the fourth quarter of FY22, PAT of KSE100 index companies was up 8.0 percent YoY, led by Banks, E&Ps and Technology. Similarly PBT of KSE100 index companies was up by 14 percent YoY during the fourth quarter of 2022.
Inspite of high profit, dividend payout was down by 4.0 percent YoY to Rs 404 billion in 2022. This is probably due to higher tax payment and circular debt that is affecting cash flow of companies.
“For our analysis, we have taken 86 companies out of the total 100 companies (that have announced their results), which represents 91 percent of KSE-100 market capitalization. We believe that adding remaining companies would not materially impact profitability growth trend,” Sunny Kumar said.
Copyright Business Recorder, 2023
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