KARACHI: Board of Management of Pakistan State Oil (PSO) meeting Thursday at Karachi reviewed performance for year ended June 30, 2012, in which it achieved a major milestone by becoming Pakistan’s first company with revenues exceeding a trillion rupees.

For the year ended June 30, 2012, PSO’s revenue exceeded Rs1,199 billion as compared to Rs 975 billion in FY11, representing 23 per cent growth.

It announced after tax earnings of Rs9.06 billion in FY12 as compared to Rs14.78 billion in last year.

Profitability was severely impacted by rapid devaluation of Pak rupee along with reduction in inventory gains. These losses absorbed improvement in margins of Furnace Oil and HSD along with recovery of financial income from power sector.

Earnings in FY12 are lower as compared to FY11 due to a deferred tax adjustment made in previous year amounting to Rs2.29 billion which had resulted from reinstatement of rate of turnover tax by tax authorities.

Further, financial cost resulting from accumulation of highest ever receivables continue to constrain both profitability and liquidity of PSO.

In period under review, industry’s volumes for Black Oil reduced by 8 per cent, whereas, White Oil grew by 4 per cent reflecting increase in PMG consumption of 22 per cent while a decline of 1 per cent was recorded in HSD demand.

In spite of reduction in market size of HSD, PSO has been able to increase its market share from 54.9 per cent to 56 per cent. It also continued its overall domination of market with its share in Black Oil and White Oil segments standing at 78.1 per cent and 55.1 per cent respectively, thereby contributing to an overall market share of 65.4 per cent.

Based on this performance, the company’s Board declared a final cash dividend of Rs2.5 per share in addition to already paid interim dividend of Rs3 per share.

It was also decided that the company will issue 20 per cent bonus share for year ended June 30, 2012.

Over the past year, PSO introduced latest, technologically advanced and state-of-art anti-counterfeit solution with each retail size pack of lubricants called Secure Code.

An awareness campaign was also launched to raise mass understanding of this unique feature.

Board Members, while expressing confidence in PSO management showed increasing concern over rising balance of receivables which stand at Rs237 billion as on August 9, 2012.

This creates acute financial crunch on company as it struggles to meet its international and local obligations. It was noted this situation is not sustainable and presents a significant risk to PSO’s ability to ensure availability of product.

PSO management continues to constantly pursue IPPs and government of Pakistan for recovery of its outstanding receivables, says press release of company.

KESC’s pre-tax profit stood at Rs 2.568 billion compared to loss before tax of Rs 10.054 billion in 2011.

KARACHI: Karachi Electric Supply Company Ltd (KESC) has for the first time reported a profit bofore tax of Rs 2.620 billion during the year ending June 30, 2012 against a net loss of Rs 9.393 billion last year.

According to financial results sent to the Karachi Stock Exchange on Wednesday, the pre-tax profit of the company stood at Rs 2.568 billion during the period under review compared to loss before tax of Rs 10.054 billion in 2011.

The utility company posted an earning per share of Rs 0.11 as against loss per share of Rs 0.44 in 2011.

KESC’s revenues surged to Rs 92.569 billion in 2012 as compared to Rs 85.926 billion while the company obtained Rs 70.029 billion in tariff adjustment.

Fed Chairman Ben Bernanke on Wednesday expressed comfort with the current policy stance, although he held out the prospect of more bond buying if the economy deteriorated. - Reuters photo

WASHINGTON: U.S. economic growth cooled in the first quarter as businesses cut back on investment and restocked shelves at a slower pace, but the biggest rise in consumer spending in more than a year cushioned the blow.

Gross domestic product expanded at a 2.2 percent annual rate, the Commerce Department said on Friday, moderating from the fourth quarter’s 3 percent rate.

Economists had expected somewhat firmer growth, but were taken by surprise by another big drop in defense spending.

Still, growth was stronger than the 1.5 percent or less pace analysts had anticipated early in the quarter.

While the growth pace remained too slow to offer comfort to President Barack Obama as he seeks a second term, it did not appear weak enough to alter the wait-and-see stance on monetary policy at the Federal Reserve.

“There’s nothing catastrophic happening, this is just slow growth and this underscores that the economy is on sound footing but nothing more,” said Steven Baffico, chief executive at Four Wood Capital Partners in New York.

Even with the deceleration in growth, the United States is performing better than most advanced nations, with some economies in Europe already back in recession.

Government spending dropped for a sixth straight quarter as efense outlays fell and austerity at state and local governments showed few signs of easing.

A rise in demand for automobiles, which powered the largest pick up in consumer spending since the fourth quarter of 2010, helped offset the drag from government and business spending, which dropped for the first time since the recession ended.

The slump in business spending was likely to be temporary and related to the expiration of tax incentives for businesses, economists said. Corporations are sitting on a $2 trillion dollar cash pile.

In another heartening sign, home construction rose at its fastest pace since the second quarter of 2010, thanks to an unusually warm winter.

Economists said that while growth was not weak enough to spur the Fed into another round of bond buying, it still bolstered the central bank’s view that interest rates should be kept near zero at least through late 2014.

Fed Chairman Ben Bernanke on Wednesday expressed comfort with the current policy stance, although he held out the prospect of more bond buying if the economy deteriorated.

“This report plays directly into the hands of those who want to keep rates low for a very long time,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.

CONSUMERS TAKE UP SLACK

Stocks on Wall Street rose and recorded their best weekly gains in more than a month as forecast-beating profits from Amazon.com and Expedia offset the GDP report.

Prices for U.S Treasury debt weakened, while the dollar fell against a basket of currencies.

Though consumers took up the slack for growth in the first quarter, some details of the report painted a somewhat weak picture for the second quarter.

Consumer spending, which makes up about 70 percent of U.S. economic activity, increased at a 2.9 percent rate in the first quarter after rising 2.1 percent in the final three months of last year.

Automakers had reported that sales rose by the most in four years during the first quarter. Part of that reflected pent-up demand after last year’s earthquake and tsunami in Japan left showrooms bereft of popular models.

Motor vehicle production contributed 1.12 percentage points to first-quarter GDP growth, more than double the prior quarter, and spending on so-called durable goods, like autos rose at a 15.3 percent pace.

But a repeat performance in the second quarter is unlikely as auto sales ended the prior period on a soft note.

And with wage growth anemic and the labor market showing early signs of fatigue after employment growth averaged 246,000 per month between December and February, the surge in consumer spending will probably fizzle.

Spending in the last quarter was funded from savings, with Americans stashing away cash at a slower 3.9 percent rate, compared to 4.5 percent in the fourth quarter.

The amount of money left at the disposal of households after accounting for taxes and inflation increased at an only 0.4 percent pace after rising 1.7 percent in the prior quarter.

“Lower savings plus weak income is not a favourable combination for the consumption outlook,” said Neil Dutta, an economist at Bank of America Merrill Lynch in New York.

Consumer confidence was little changed this month, a separate report showed.

The company said it would remain focused on improving its operational efficiencies to counter those challenges. - File photo

KARACHI: Pakistan Telecommunication Company Limited (PTCL) announced unconsolidated profit-after-tax at Rs2.8 billion for the first half of FY12 (ended Dec 31, 2011), translating into earning per share (eps at Re0.56).

The earnings decreased 29 per cent from RsRs4.0 billion and eps at Re0.79 in the corresponding period of the previous year.

“The results were largely inline with our expectations,” commented Nauman Khan, analyst at Topline Securities.The company did not disclose consolidated earnings that would include the overall Ufone’s contribution to earnings of PTCL.

“Our preliminary assessment suggests that consolidated earnings would fall in the range of Re0.87-0.92 per share, down 20-24 per cent from Rs1.15 per share posted in the same period last year,” the analyst said.

The major reason behind subdued earnings in the period under review was the shrinking gross margins by 142bps to 26.1 per cent as compared to 27.5 per cent in the same period last year.

Company’s ailing fixed line operation stands as a major culprit behind reduced gross margin, analyst said.

Operating margins fell to 9.5 per cent, from 11.3 per cent. The decline in company’s ‘other income’ by 46 per cent to Rs1.7 billion in 1HFY12 as against Rs3.2 billion last year also assisted in dragging down the overall profitability.

In second quarter FY12, PTCL posted unconsolidated eps of Re0.28, showing a decline of 26 per cent as compared to Re0.38 in same time last year.

However, compared to the previous quarter (1QFY12), earnings improved by 8 per cent.

Furqan Ayub, analyst at brokerage, JS Global, observed that though the revenues grew by 6 per cent year-on-year (YoY) to Rs29.3 billion for 1HFY12, from Rs27.7 billion, but an unyielding cost structure accounted for an 8 per cent YoY rise in operating costs. Consequently, operating margins dipped by 180bps to 9.5 per cent from 11.3 per cent in the same time last year.

Financial charges increased to Rs133 million, from Rs127 million. Earnings further dampened with the sharp drop in ‘Other Operating Income’, in the absence of dividend income from Ufone.

Faisal Bilwani, analyst at Elixir Securities, said that investors remained anxious over future earnings outlook but took heart from the fact that the accounts did not include numbers from cellular subsidiary that might be revealed in a few days.

Indus Motors reports 95pc jump in earnings
Indus Motors Company Limited announced results for 1HFY12 ended Dec 31, posting profit at Rs1.77 billion, converted to earning per share at Rs22.48.

The earnings represented a massive jump of 95 per cent, from Rs908 million (eps:Rs11.55) in the corresponding period of previous year. The board, which met on Wednesday, also announced an interim cash dividend at Rs8 per share.

According to analyst Syed Atif Zafar, the major reasons for growth in the company’s earnings were rise in net sales by 23 per cent YoY because of higher unit sales and increased prices.

Moreover, improved gross margins at 7.5 per cent, from 5.1 per cent in the corresponding period last year and rise of 25 per cent in ‘other income’ contributed to the stellar results.

“However on a quarter-on-quarter basis, the company’s profitability was down by 12 per cent in second quarter FY12 to Rs10.55 per share. The decline in earnings was stated to be due to lower unit sales on account of seasonality and decline in other income by 26 per cent QoQ,” the analyst said.

A statement issued by Indus Motors stated that the automotive industry had to face many challenges during the fiscal year 2012 which included managing severe supply disruption due to Thai floods together with steep rupee devaluation, increased cost pressures due to energy shortages and influx of used cars.

The company observed that during the half year, company’s sales grew by 6.3 per cent to 24,341 units compared to 22,903 units sold for the same period last year.

Correspondingly the production also increased by 3.5 per cent to 24,316 units as against 23,482 produced in the similar period of the previous year.

“The company’s combined sales revenue for CKD, CBU & Parts business amounted to Rs33 billion and the profit-after-tax stood at Rs1.77 billion on account of increased sales volume and cost efficiencies,” Indus Motors said in its statement.

The company added: “Going forward the challenges for auto industry will be depreciating rupee and resultant cost pressures, expiry of AIDP, correction in commodity prices which may impact rural buying, impact of ban on CNG cylinders and conversion kits imports and influx of imported used cars.”

The company said it would remain focused on improving its operational efficiencies to counter those challenges.