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ICI Pakistan Posts a 50% Drop in Profits in H1 FY2018-19

ICI Pakistan Limited has announced its financial results for the half-year that ended on December 31, 2018. It posted a profit of Rs. 824 million, down by almost 50% from Rs. 1.62 billion in the corresponding period last year.
The decline in profits was due to the decrease in operating results, higher finance cost by Rs 490 million owing to increased interest rates and higher debt due to shift in company’s payment policy from Usance LC to Sight LC to minimise foreign exchange losses and higher effective tax rate due to non-availability of tax credits as were available during same period last year on the Light Soda Ash expansion project.
However, the company saw a 20.8% increase in sales to Rs. 28.40 billion with the cost of sales of Rs. 24.06 billion which was higher by 26.10% in the period under view.
Earnings per share for the half-year period were qouted at PKR 8.83 as compared with Rs. 17.56 in the corresponding period.
The Board has also approved an interim cash dividend for the financial year ending June 30, 2019, at the rate of 45% i.e. PKR 4.50 per share of Rs. 10.
On a Consolidated Basis
The earnings of the company, along with its subsidiaries ICI Pakistan PowerGen limited, Cirin Pharmaceuticals (Private) Limited and NutriCo Morinaga (Private) Limited, were quoted at Rs 28,408 million, 21% higher than the same period last year, with the Polyester, Soda Ash and Chemicals & Agri Sciences Businesses providing the momentum with growths of 30%, 42% and 8%, respectively.
Furthermore, operating results amounted to Rs 1,949 million, 9% lower as compared to the same period last year on account of lower operating performances in the Polyester and Life Sciences Businesses, which was partially offset by improved performance in the Soda Ash and Chemicals & Agri Sciences Businesses by 21% and 1217% respectively due to higher sales volume after successful commissioning of 75000 tons per annum expansion plant.
The Chemicals & Agri Sciences Business showed improved performance on the back of strong operating result delivered by Agro Chemicals segment under Agri Division.
The operating result of Life Sciences Business was lower as sales were adversely affected by a ban on import and marketing of recombinant bovine somatotropin injections, along with higher costs due to a surge in international raw material prices and rupee devaluation.
Project
The Board of Directors has also authorized the management to proceed with Phase 2 of the 1500,000 tons per annum (TPA) Light Ash expansion of the Soda Ash Plant.
The company has already successfully commissioned Phase 1 of the project (75,000 TPA in February 2018). This is in addition to a Dense Ash expansion of 70,000 MT per annum which will cater to the growing needs of the market.
ICI’s script at the bourse closed at Rs. 765, down by Rs. 5 or -0.65% with a turnover of 2300 shares on Monday.

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