OGDC’s half-year profit slips 6pc on high exploration cost

KARACHI: Oil & Gas Development Company Limited (OGDCL) on Wednesday said its profit, for the 6-month period ended December 31, 2019, dropped 6 percent year-on-year primarily owing to surging exploration cost and a fall in production amid easing international crude oil prices.

A statement said the company earned Rs53.184 billion in the first half of the current fiscal year compared to Rs56.756 billion posted in the same period last year.

As a result of lower profitability, the earning per share (EPS) for the period settled down at Rs12.37, vis-à-vis Rs13.20 in the corresponding period a year earlier.

The company however announced an interim cash dividend for the quarter ended December 31, 2019 at Rs1.75/share (17.5 percent), in addition to one already paid at Rs2.5/share (25 percent).

Analysts at brokerage Arif Habib Limited in a report said the company’s topline in 2QFY20 ticked up 3 percent year-on-year, clocking in at Rs67.237 billion as compared to Rs65.099 billion, during same period last year amid 14 percent year-on-year rupee devaluation against dollar.

However, they added that its oil and gas production fell 5 percent year-on-year each, tagged with 6 percent year-on-year tumble in crude oil prices.

On a cumulative basis, the energy giant’s net sales grew 5 percent year-on-year to Rs133.441 billion, the brokerage report said.

The exploration costs saw a massive surge of 156 percent year-on-year reaching Rs6.463 billion due to one dry well (Soghari X-03) and a higher prospecting expenditure in 2QFY20. With this, the total exploration costs during 1HFY20 settled at Rs10.425 million, up 133 percent year-on-year.

Company's other income in 2QFY20 settled at Rs5.082 billion, against Rs7.752 billion in same period last year, down 34 percent year-on-year, given absence of exchange gain on foreign currency accounts.

This took other income during 1HFY20 to Rs7.927 billion, a decline of 33 percent year-on-year.

Amreli Steels 6-month loss hits Rs313mln

Amreli Steels Limited posted a loss of Rs313 million for the six months ended December 31, 2019 (LPS: Rs1.06), largely because of lower rebar prices, high scrap rates, and rupee deprecation.

A statement said the company earned had Rs516 million with EPS of Rs1.74 in the corresponding period of a year earlier.

Analysts at Arif Habib Limited said the company’s revenue jumped up 18 percent year-on-year in 2QFY20 owing to a surge in the off-take (sales estimated to be around 78,000 tons in 2QFY20 vs 62,000 tons in same period last year) since prices were effectively lower post implementation of a 17 percent Federal Excise Duty in FY20 budget.

In 1HFY20, the steelmakers’ topline increased 11 percent year-on-year led by improved offtake, while gross margins reached 7.9 percent in the quarter under review (2QFY19: 9.7 percent), down by 2ppts year-on-year, 3ppts quarter-on-quarter.

“Although we expected higher margins during 2QFY20; however, we believe possible utilisation of existing scrap inventory at higher prices, lower rebar prices, and rupee depreciation were the main culprits behind the compressed gross profitability,” the brokerage said adding, “Albeit, we await clarity from the management.

On a cumulative basis, margins in 1HFY20 retracted by 3ppts year-on-year to 9.3 percent given aforementioned reasons.

Jump in Amreli Steel’s financial charges at Rs667 million (up two times year-on-year) in 2QFY20 remained in line with higher borrowings undertaken by the company alongside rate hikes by the State Bank of Pakistan.

Maple Leaf Cement incurs 32pc loss in first half

Maple Leaf Cement Factory Limited (MLCFL) announced it had landed a loss of 32 percent to Rs1.767 billion for the half year ended December 31, 2019 (EPS: Rs2.42), mostly because of tumbling gross margins.

The company had posted a profit of Rs1.334 billion with EPS of Rs1.94 in the corresponding period earlier.

Brokerage Arif Habib Limited in a report said the cementmaker’s topline jumped 35 percent year-on-year to Rs9 billion in 2QFY20 as lower prices in the quarter under review offset the impact of a massive 82 percent surge in dispatches to 1.57 million tons.

“In 1HFY20, its revenue went up 31 percent year-on-year to Rs16.2 billion supported by a robust 77 percent jump in total off-take to 2.9 million tons. Albeit, weak retention prices kept the growth contained,” brokerage house added.

Given a decline in prices, tagged with rupee devaluation and costs associated with the company’s new 2.2 million ton line, 2QFY20 margins retracted by 15ppts to 5.5 percent (2QFY19: 20.7 percent).

On a quarter-on-quarter basis, margins recuperated from 3.9 percent in 1QFY20 led by robust topline growth alongside lower coal prices, while In 1HFY20, margins tumbled to 3.8 percent (1HFY19: 24.6 percent) given aforementioned reasons.

The company’s finance costs shot up three times to Rs870 million in 2QFY20 given augmented borrowing by the company as well as higher interest rates.