Staff Report:
KSE 100 index companies posted their highest-ever earnings of Rs1.7 trillion, up 25% year-on-year (YoY) in FY24 compared to Rs1.3 trillion in FY23. In US dollar terms, profit after tax (PAT) increased by 10% YoY to $5.8 billion in FY24.

This growth in earnings was primarily driven by the banking sector (+35% YoY), the fertilizer sector (+75% YoY), and cement (+38% YoY) in FY24.

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The banking sector’s earnings rose by 35% YoY to Rs591 billion (36% of total KSE-100 index profitability) in FY24, largely due to higher Net Interest Income (NII) amid increased interest rates.

Similarly, the fertilizer sector’s profitability jumped by 75% YoY to Rs168 billion (10% of KSE-100 index profitability) in FY24, aided by a 2% increase in urea and a 40% increase in DAP offtake, along with price hikes of 59% for urea and 9% for DAP.

Cement sector earnings surged to Rs115 billion, up 38% YoY in FY24, mainly due to higher retention prices and lower coal costs despite a decline in local offtake.

Other sectors like chemicals, engineering, and refineries saw a decline in earnings during FY24, with profits falling by 38%, 27%, and 25% YoY, respectively. The technology sector reported a loss of Rs5.7 billion in FY24, mainly due to the losses of Pakistan Telecommunication Company (PTC).

The pharmaceutical sector experienced a 71% YoY increase in profitability to Rs10 billion, compared to Rs6 billion in FY23, primarily due to improved margins following the deregulation of non-essential products and a decrease in finance costs.

In 4QFY24, KSE 100 companies’ profitability increased by 8% YoY to Rs367 billion.

For this analysis, 86 out of 100 companies (representing 95% of KSE-100 market capitalization) were taken into account. Including the remaining companies is not expected to significantly impact the profitability growth trend.

KSE 100 index companies announced a cash dividend of Rs666 billion (+30% YoY) in FY24 compared to Rs512 billion in FY23.

This translates into a 40% dividend payout in FY24 versus 39% in FY23.

The payout ratio of the Exploration & Production (E&P) sector rose to 27% in FY24 from 21% in FY23, following improved cash recovery due to higher gas prices. The banking sector’s payout ratio also increased from 42% in FY23 to 47% in FY24, amid record profitability.

The banking sector remained the largest contributor, announcing dividends of Rs278 billion in FY24, followed by E&Ps (Rs118 billion) and fertilizers (Rs90 billion).

Among the banks, United Bank (UBL) was the largest contributor with Rs54 billion, followed by Meezan Bank (MEBL) with Rs48 billion and MCB Bank (MCB) with Rs41 billion.

In the E&P sector, Oil & Gas Development Company (OGDC) announced dividends of Rs43 billion, followed by Pakistan Oil Fields (POL) with Rs27 billion, Mari Petroleum (MARI) with Rs31 billion, and Pakistan Petroleum (PPL) with Rs16 billion.

In fertilizers, Engro Fertilizers (EFERT) was the largest contributor with Rs33 billion, followed by Fauji Fertilizer (FFC) with Rs30 billion, Engro Corporation (ENGRO) with Rs13 billion, Fatima Fertilizer (FATIMA) with Rs11.5 billion, and Fauji Fertilizer Bin Qasim (FFBL) with Rs1.3 billion.

In the power sector, Hub Power (HUBC) announced a cash dividend of Rs26 billion, followed by Kot Addu Power (KAPCO) with Rs7.5 billion in FY24.

In food and personal care, Colgate-Palmolive (COLG) was the largest contributor with Rs14 billion, followed by Nestle Pakistan (NESTLE), which declared dividends of Rs8.3 billion. Unilever Pakistan (UPFL) also announced dividends of Rs7 billion in FY24.

In chemicals, Lucky Core Industries (LCI) declared a dividend of Rs5.5 billion, followed by Engro Polymer (EPCL) with Rs3 billion and Lotte Chemical (LOTCHEM) with Rs2.3 billion.