Karachi: Corporate profitability for companies listed on Pakistan's KSE-100 index rose by 23% year-on-year in the first quarter of fiscal year 2027, reaching Rs550 billion, although it marked an 8% decline compared to the previous quarter. Dividends also saw a significant increase, up 20% year-on-year, according to a recent press release from JS Global.
According to JS Global, the boost in profitability was largely driven by the exploration and production (E&P), refineries, and oil marketing companies (OMCs) sectors. Excluding these sectors, profitability saw a more modest year-on-year increase of 5%, with an 8% decline from the previous quarter. The E&P sector experienced a notable 43% year-on-year increase in earnings, attributed to higher revenues from rising oil and gas prices and increased other income, although quarterly earnings fell by 47%.
The banking sector, however, saw a 2% decrease both year-on-year and quarter-on-quarter in earnings, amounting to Rs161.5 billion, due largely to higher operating expenses. The cement sector's profitability rose by 13% year-on-year, but decreased by 11% quarter-on-quarter to Rs48.6 billion, reflecting a normalized tax rate following deferred tax adjustments in the previous quarter.
The fertilizer sector reported an 11% year-on-year increase and a 9% quarterly increase in profitability to Rs47 billion, driven by higher sales volumes of urea and increased prices. The automobile sector saw a 19% year-on-year growth but an 11% quarterly decline in earnings to Rs25.7 billion, attributed to decreased sales volumes and market uncertainty regarding auto policies.
Refinery sector earnings surged to Rs32.2 billion from Rs1.6 billion the previous year, due to higher gross refining margins amid geopolitical tensions. Pharmaceutical sector earnings increased by 14% year-on-year and 81% quarter-on-quarter, driven by higher seasonal demand.
OMCs experienced a 2.4-fold increase in year-on-year earnings to Rs32.2 billion, recovering from a loss in the previous quarter, primarily due to inventory gains. The analysis covered 85 companies, representing 96% of the KSE-100 market capitalization, suggesting that the remaining companies would not significantly impact the observed profitability trends.
Dividends totaled Rs180.7 billion for the quarter, with the banking sector being the largest contributor at Rs74.9 billion, followed by the fertilizer and E&P sectors. Key banking sector contributors included United Bank Limited, Meezan Bank Limited, and MCB Bank Limited. The fertilizer sector saw a 72% year-on-year rise in dividends, led by Fauji Fertilizer Company.
Other sectors such as food and personal care, power, and cement showed varied dividend trends, with the food sector experiencing a decline and the power and cement sectors remaining flat. The E&P sector dividends increased by 31%, while the automobile sector saw a 10% rise in dividends.