Earnings Report /
Pakistan

ICI Pakistan: 4QFY22 Result Review - Higher margins beat expectations

  • ICI posted consolidated net profit of PKR663mn for 4QFY22 (EPS: PKR7.18) against our estimate of PKR4.90

  • Gross margin dipped slightly by c.1.5ppt QoQ to 20.36%, slightly higher than our estimate of 19.5%

  • Despite the company’s intention to acquire 75% stake in LOTCHEM, management declared a final payout of PKR15/sh

Intermarket Securities
2 August 2022

ICI posted consolidated net profit of PKR663mn for 4QFY22 (EPS: PKR7.18) against our estimate of PKR4.90, majorly due to higher than expected topline and gross margins. This is a massive decline of 67% from a NPAT of PKR2.0bn (EPS: PKR21.79) last quarter. ICI in a surprising turn of events announced a dividend payout this quarter of PKR15/sh. Although the company historically does payout in the final quarter, we belived they would hold due to their intention to acquire 75% stake in Lotte Chemical.

 Key highlights of 4QFY22

  • Revenue clocked in at PKR28.3bn versus our expected topline of PKR25.6bn. Higher PSF volumes and prices, along with a decent increase in Soda Ash volumetric sales helped ICI post higher net sales.

  • Gross margin dipped slightly by c.1.5ppt QoQ to 20.36%, slightly higher than our estimate of 19.5%, owing to higher pricing power and demand. 

  • Among other line items i) finance cost clocked in at PKR415mn, up 77%/22% YoY/QoQ amid higher interest bearing debt and interest rates ii) other income of PKR121mn, was relatively in line with our expectations iii) exchange losses clocked in at PKR384mn, which were elevated compared to previous quarters.

  • The effective tax rate clocked in at 76% due to the imposition of one-off super tax. The ETR is lower than our expectation of c.81%.

  • Compared to previous years where the company has not performed the best during its final quarter, ICI took out a positive result despite the one-off super tax. Moving forward, we believe the company can greatly benefit from the synergies that can be created through the acquisition of LOTCHEM. Despite the company’s intention to acquire 75% stake in LOTCHEM, management declared a final payout of PKR15/sh.