Updated Apr 23, 2005

While the market is still going through bearish spell, corporate earnings, displayed by the financial results are expected to keep investors' interest live in the equities market. As such the KSE-100 index eroded by another 411 points during the four sessions to close at 7,102 level. The COT issue still haunts the market and confusion seems to be at the peak. The SECP also does not seem to be ready to accommodate KSE recommendations for the time being, at least.

Engro Chemical Pakistan has announced its first quarter results posting Rs409 million profit after tax (EPS: Rs2.67), showing 49% growth compared to the same period last year. It was 5% higher than forecast of Elixir Securities Pakistan estimates. Pre-tax profit at Rs620 million overshot its expectations by 16%, primarily on the back of a 237bps positive variance in gross margins and lower Selling and Distribution expenses. The higher profit for the quarter was primarily driven by: 1) a 29% growth in urea sales to 232,000 tons (do not ignore 'speculative' dealer buying), 2) higher urea prices and 3) receipt of a first-ever dividend from its fully owned subsidiary, Engro Asahi. The company also announced plans (subject to shareholder approval) to invest up to Rs2 billion in its food diversification initiative, Engro Foods (a private limited company). Rsone billion (50%) will be Engro's initial equity investment with the balance spread out over first few project years viz. equity investment/loans/preference shares/guarantees. Engro Foods will start off with milk processing and graduate later to other related businesses. Engro's second quarter production will be affected by a 4-week shutdown, currently in progress.

Pakistan Oilfields has announced third quarter results, posting Rs2,401 million profit after tax (EPS: Rs18.27) for July-March period, up by 32% compared to profit for the corresponding period of last year. Third quarter earnings, at Rs999 million (EPS: Rs7.60), have come 76% higher. Main reason for the favorable variance from market expectations is a lower effective tax rate (1,400bps), with pre-tax profits actually falling short of estimates by 3.7% (5.5% lower top, partially mitigated by lower than expected exploration costs). A 32% profit growth has been driven primarily by high oil prices (benchmark Arab Light up 29% during the period), with 41% lower exploration costs further aiding bottom-line performance. The impact of production enhancement from Pariwali concession (Well No. 5 where drilling completed earlier this month) will be visible from next quarter.

Analysts' full-year earnings estimate for POL is Rs3,496 million (EPS: Rs26.6).

Maple Leaf Cement announced its third quarter results, displaying healthy 26% growth in top-line earnings to Rs3.11 billion while bottom-line earnings grew by 15% to Rs514 million (EPS: Rs2.85). After-tax profits was higher because the company allowed tax provisioning of only 31% during Jul-March period and 23% tax provisioning for Jan-March quarter. Revenue growth was fuelled by robust 19% growth in dispatches to 986,000 tons (86% capacity utilization) combined with 6% rise in retention prices. However, despite the increase in retention prices there was 10% decline in EBITDA margins per ton on account of massive 19% rise in manufacturing costs per ton. Analysts expect full-year profits to amount to Rs634 million (EPS: Rs3.51), after allowing full 35% corporate tax provisioning. Analysts do not expect the company to offer its shareholders any cash payouts as they are currently undertaking capex plans to increase production capacity. During third quarter there was a massive 22% rise in production costs per ton, EBITDA margins falling by 12%. Decline in margins can be attributed to relatively slower growth in retention prices and higher energy costs (especially coal prices). On a cumulative Jul-March manufacturing costs increased by 19% to Rs1,908/ton, while EBITDA margins decreased by 10% to Rs1,201/ton. Going forward, analysts expect a slight improvement in margins as majority of the manufacturers increased the price of cement, which shall favorably impact retention prices.

Fauji Fertilizer Bin Qasim has posted a very good first quarter result for 2005. Revenue of the company increased from Rs1.45 billion to Rs2.46 billion because of higher off take. The revenue growth was contributed by demand hike due to late application of urea on wheat and inventory build up from fears of supply shortage in Kharif. Furthermore favorable weather conditions have also contributed to the increase in fertilizer off-take. DAP prices during the period declined marginally, whereas Urea prices went up by approximately 3%. Cost of sales on the other hand increased by only 42% as against a 70% rise in revenue. Consequently, gross margins went up from 23% to 36%. Other income increased by Rs69 million (from Rs18 million to Rs87 million), whereas distribution expenses went up by Rs120 million. EBIT margins went up to 26% as against 12% in first quarter of 2004. Profitability of the company went up by 238% to Rs375 mil