KSE-100 posts highest-ever earnings of Rs1.7trn

KARACHI: The KSE-100 index companies posted highest-ever earnings of Rs 1.7 trillion up 25 percent on year-on-year basis in FY24 as compared to Rs 1.3 trillion in FY23.

In the USD terms, the profit after tax (PAT) of these companies increased by 10 percent YoY to $5.8 billion in FY24.

This growth in earnings is majorly contributed to by Banking Sector (35 percent YoY), Fertilizer sector (75 percent YoY), and Cements (38 percent) in FY24, a research report of Topline Securities said.

Banking sector’s earnings increased by 35 percent YoY to Rs 591 billion (36 percent of the total KSE-100 index profitability) in FY24, primarily driven by higher Net Interest Income (NII) amid higher interest rates, the report said.

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Similarly profitability of the Fertilizer sector increased by 75 percent YoY to Rs 168 billion (10 percent of total KSE-100 index profitability) in FY24, amid higher Urea and DAP offtake by 2.0 percent and 40 percent along increased Urea and DAP prices by 59 percent and 9.0 percent, respectively, it added.

Cement sector’s earnings surged to Rs 115 billion up 38 percent YoY in FY24 mainly due to higher retention prices along with lower coal cost despite lower local offtake.

Other sectors like Chemicals, Engineering, Refinery, and recorded decline in earnings during FY24 with profitability decline of 38 percent YoY, 27 percent YoY, and 25 percent YoY, respectively. Technology Sector reported loss of Rs 5.7 billion in FY24 primarily led by losses of Pakistan Telecommunication Company (PTC).

Pharmaceutical sector witnessed a 71 percent YoY growth in profitability to Rs 10 billion, compared to Rs 6.0 billion in FY23, primarily due to an improvement in margins following the deregulation of non-essential products and a decline in finance costs.

In the fourth quarter of FY24, profitability of KSE-100 companies increased by 8.0 percent YoY to Rs 367 billion. “For our analysis, we have taken 86 companies out of the total 100 companies (that have announced their results), which represents 95 percent of KSE-100 market capitalization. We estimate that adding remaining companies of Index would not materially impact profitability growth trend,” the report said.

The KSE-100 index companies announced cash dividend of Rs 666 billion (up 30 percent YoY) in FY24 compared to Rs 512 billion in FY23.

This translates into 40 percent dividend payout in FY24 against 39 percent last year in FY23. Payout ratio of the E&Ps sector increased to 27 percent in FY24, compared to 21 percent in FY23, following an improvement in cash recovery of companies due to the increase in gas prices. Banking Sector’s payout ratio also rose from 42 percent in FY23 to 47 percent in FY24, amid record profitability.

Banking sector remained the largest contributor with dividend announced of Rs 278 billion in FY24 followed by E&Ps (Rs 118 billion), and Fertilizers (Rs 90 billion).

United Bank (UBL) remained the largest contributor in Baking sector with contribution of Rs 54 billion followed by Meezan Bank (MEBL) of Rs 48 billion and MCB Bank (MCB) of Rs 41 billion.

Within E&P sector, Oil & Gas Development Company (OGDC) announced dividend of Rs 43 billion, followed by Pakistan Oil Fields (POL) of Rs 27 billion, Mari Petroleum (MARI) of Rs 31 billion and Pakistan Petroleum (PPL) of Rs 16 billion.

In Fertilizer sector, Engro Fertilizers (EFERT) remained the largest contributor of Rs 33 billion followed by Fauji Fertilizer (FFC) of Rs 30 billion, Engro Corporation (ENGRO) of Rs 13 billion, Fatima Fertilizer (FATIMA) of Rs 11.5 billion and Fauji Fertilizer Bin Qasim (FFBL) of Rs 1.3 billion.

In Power sector, Hub Power (HUBC) announced cash dividend of Rs 26 billion followed by Kot Addu Power (KAPCO) of Rs 7.5 billion FY24. In Food & Personal Care, Colgate-Palmolive (COLG) remained the largest contributor of Rs 14 billion followed by Nestle Pakistan (NESTLE) declared dividend of Rs 8.3 billion. Unilever Pakistan Foods (UPFL) also announced the dividend of Rs 7.0 billion in FY24.

In Chemical sector, Lucky Core Industries (LCI) declared a dividend of Rs 5.5 billion followed by Engro Polymer (EPCL) of Rs 3.0 billion and Lotte Chemical (LOTCHEM) of Rs 2.3 billion.