Karachi: ICI Pakistan announced its CY11 results where the profitability witnessed a decline of 20.3% YoY.
According to Alfalah Securities Limited, ICI posting profit after tax of PKR 1.9 billion (EPS: PKR 13.95) along with a final dividend payout of PKR 5.5 per share taking the cumulative full year DPS to PKR 9.0 for CY11. The revenues witnessed an increase of 13.33%YoY to PKR 44.8 bn. The decline in sales is mainly attributed to lower gas supply by SNGP to its Soda Ash and Polyester Staple Fiber plants which were suspended for 174 and 186 days respectively as compared to 143 and 108 days last year resulting in an incremental cost burden of PKR 825 million. ICI also booked impairment worth of PKR 210 million related to Pakistan Powergen Limited which a 100% is owned captive power plant of ICI, due to deterioration in future economic prospects arising on the back of lower gas supply.
ICI has also approved a coal fired boiler project to be set up at a cost of PKR 2 billion which is expected to be commissioned in Q2, 2013 which will improve the energy supply to the Soda Ash business. Moreover, ICI has also taken the expenses arising out of demerger of the paints business from ICI, on books amounting to PKR 170 million, ICI had decided to separate the paints business from ICI and form a new company named “AkzoNobel Pakistan”. The stock is currently trading at a CY11, P/E multiple of 10.0 times respectively. Considering the declining profitability, weak economic outlook and expensive valuation multiples, Alfalah Securities Limited maintains a “Sell” stance on the stock at the current market price.