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Thursday, July 18, 2024

Corporate sector emerges stronger from pandemic

The corporate sector’s listed companies have shown a thirty-eight percent year-on-year growth in profits from October to December. Compared to the preceding year, the pandemic year went in favor of most sectors in Pakistan.

Results from different analyses of the country’s corporate sector show that overall, the corporate sector’s listed companies have shown a thirty-eight percent year-on-year growth in profits from October to December.

Banks remained the highest contributors in the last quarter as they contributed to the highest profits of Rs. 48 billion. However, YoY fell eight percent from 2019.

Although, 15 percent lower than the same quarter in 2019, the oil and gas sector (both exploration and production), produced the second-highest profit of Rs. 41 billion, down from Rs. 48 billion.

Read More: Textile companies have an increased profit of 32%

The highest growth in profit was by the technology and communication sector, with a staggering 27.6 times more earnings from the preceding year. The earnings were Rs. 5.9 billion, rising from Rs. 207 million. The rise in earning was led by software companies like Systems Ltd, TRG Pakistan, Netsol Technologies, and Avanceon Ltd.

The engineering sector, which mainly consists of steel companies, also did well compared to most sectors with earnings of Rs. 5.1 billion, seeing a growth of 18.7 times from Rs. 257 million a year ago. The cement sector also posted a 570 percent increase in net profit to Rs. 11.7 billion from Rs. 1.7 billion in 2019.

The major factor for engineering and cement to do well is the fact that the government has been focused on incentivizing growth in the infrastructure sector in the country. The construction sector was the first one to be resumed by the government during the pandemic as it provides employment opportunities to many people.

The profitability of oil marketing companies also soared 283 percent in a year from Rs. 1.6 billion to 6.1 billion.

Auto assemblers also enjoyed a bumper profit of Rs6.6bn, up 217pc from Rs2.1bn. This can be attributed to price increases in the sector.

Pharmaceuticals also posted an 83 percent increase in earnings from Rs. 1.5 billion in 2019 to Rs. 2.7 billion. Analysts contributed to this growth the impact of a pandemic on people’s drug hoarding behavior and increased usage.

Read More: Cement sector posts YoY growth of 1.98pc:AKD

Textile profits also rose 56 percent to Rs. 7.8 billion from Rs. 4.5 billion as the country benefitted from rerouting of textile orders from other countries which were experiencing lockdown due to the pandemic.

The independent power producers (IPPs) had a profit that went up 56 percent to Rs. 19.3 billion from Rs. 12.3 billion due to a stronger dollar that supported the IPPs’ dollar-based tariff.

This profitability in the corporate sector should set a good mood for business in the market and serve as a key factor for positivity in KSE-100 in the future.