ICI Pakistan Limited (PSX: ICI) has been beating the benchmark staggeringly, and there are more than many reasons to that. First, ICI Pakistan’s financial performance has been surging; with earnings up by 16 percent year-on-year, ICI Pakistan ended FY17 on a positive note. For FY17, the earnings per share (EPS) of the company clocked in at Rs35.69 per share, up by 16 percent compared to previous year.
The good financial performance ideally starts at the top, and that’s what ICI has enjoyed. The firm has seen its top line swell by 12 percent year-on-year as it showed improvements across the board. ICI has four key business segments: Life Sciences, Soda Ash, Chemicals, and Polyester.
Segmental view shows that revenues of ICI’s Polyester business grew by 7 percent year-on-year due to higher prices across the petrochemical chain, higher PSF selling prices, and higher sales of Black Fibre. Soda Ash net revenues increased moderately too (2 percent YoY) on account of higher volumes. The highest growth in net revenues was however recorded in Life Sciences and Chemical business (up by 28 percent and 20 percent YoY). The growth in Life Sciences came from new partnerships, expansions, and new product launches, whereas the growth in Chemical revenues came from increased sales volumes and greater customer base in FY17.
Moving down towards profits, improvement in operating profits came primarily from the three segments: Polyester, Life Sciences, and Chemical due to expansion of the product range and higher cost efficiencies. However, the capitalisation of 18MW power plant in the Soda Ash business disturbed the segment’s operating profitability as highlighted by the management note accompanying the FY17 result announcement.
16 percent growth in ICI’s bottom-line was also supported by higher dividend income from NutriCo Pakistan (Pvt) Limited, while the consolidated profits increased by 20 percent year-on-year that include the results of ICI Pakistan PowerGen Limited, Cirin Pharmaceuticals (Private) Limited, NutriCo Morinaga (Private) Limited.
Besides the profitability, ICI Pakistan has been on an acquisition and expansion binge. It is setting up a facility for manufacturing Japan’s Morinaga infant formula in the country. The company already had a management stake in the infant milk formula business under the name of NutriCo Pakistan Private Limited. The firm also completed its 100 percent acquisition of Cirin Pharmaceuticals (Private) Limited as a wholly owned subsidiary. And just recently, ICI executed Asset Purchase Agreement with Wyeth Pakistan Limited and Pfizer Pakistan Limited for the acquisition of certain assets that include Wyeth’s own pharmaceutical manufacturing facility in Karachi along with some of key brands, products and registrations of Wyeth and Pfizer.
In addition, the latest financial performance notice on PSX includes a note on the firm approving the establishment of a facility to manufacture Masterbatch, a colorant and additive utilised in the manufacture of various plastics under its Chemical Business.
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