ICI Pakistan suffers declining trend in profits due to change in its payment policy

January 28, 2019 (MLN): ICI Pakistan Limited has stated Profit after tax (PAT) for the six months ending December 31, 2018 at PKR 825 million, 49% lower than the same period last year.

This was due to decrease in the operating results, higher finance cost by PKR 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.

The topline earnings of the company, along with its subsidiaries Cirin Pharmaceuticals (Private) Limited and NutriCo Morinaga (Private) Limited, amounted to Rs 28,408 million, 21% higher than the same period last year, with the Polyester, Soda Ash and Chemicals & Agri Sciences Businesses providing the impetus, 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 respectively.

The Chemicals & Agri Sciences Business showed improved performance on the back of strong operating result delivered by Agro Chemicals segment under Agri Division. Lower operating result in the Polyester Business is attributable to net realizable value adjustments following decline in prices of polyester staple fibre (PSF) on higher carrying inventory required to cover the shutdown period. The operating result of Life Sciences

Business was lower as sales were adversely affected by 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.

Earnings per share (EPS) for the six months period under review was stated at PKR 8.83, 50% lower as compared to the same period last year.

Moreover, the Board has approved interim cash dividend in respect of the financial year ending June 30, 2019, at the rate of 45% i.e. PKR 4.50 per share of Rs. 10/- each to be payable to the members.

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