In a remarkable display of resilience, Pakistan’s leading 86 companies listed on the national stock market have announced record profits 2024, with a staggering net profit of Rs 1.7 trillion for the fiscal year ending 30 June 2024.
This achievement marks a substantial 25% increase from the previous year, despite facing challenging economic conditions characterized by high inflation, soaring interest rates, and a brief devaluation of the rupee.
This record profit growth in 2024 is primarily attributed to exceptional performance in large-scale manufacturing sectors, including cement, fertilizers, automobiles, and chemicals, as reported by the Pakistan Stock Exchange (PSX). Interestingly, the Pakistan Bureau of Statistics (PBS) indicates a decline in volumetric output for these industries, suggesting that they managed to sell fewer products but at significantly inflated prices, thus effectively navigating the ongoing economic crisis.
A detailed report by Topline Research titled “Pakistan Strategy – Record Corporate Profitability in FY24; Earnings Up 25% YoY; Dividend Up 30% in FY24” highlights that net profitability, when measured in US dollars, rose by 10% to $5.8 billion, compared to FY23.
The banking sector emerged as the frontrunner in this earnings surge, reporting Rs 591 billion in profits, which is a remarkable 35% increase year-on-year. Following closely, the fertilizer sector recorded a net profit of Rs168 billion, a staggering 75% increase, while the cement sector achieved Rs 115 billion in profits, rising 38% from the previous fiscal year.
Moreover, the PSX has been recognized as the best-performing stock market globally in FY24, with the benchmark KSE-100 Index surging 89%, reaching an all-time high of 78,445 points. This is a substantial leap from 41,453 points at the beginning of the fiscal year, with the index hitting an intra-day record of 81,850.5 points in recent weeks before closing at 81,484 points.
Topline Research attributes the banking sector’s robust earnings—accounting for 36% of the KSE-100 index’s total profitability—to increased Net Interest Income (NII), supported by sustained high interest rates throughout the year. The central bank maintained a key policy rate at a record high of 22% from June 2023 until June 2024, before making a significant cut of 450 basis points to the current 17.5%.
In the fertilizer sector, profitability skyrocketed by 75%, reaching Rs168 billion, spurred by a 2% increase in urea offtake, a 40% rise in DAP sales, and substantial price hikes of 59% for urea and 9% for DAP.
The cement sector also enjoyed a 38% increase in profits to Rs 115 billion, driven by elevated retention prices and reduced coal costs, despite a downturn in local demand.
Other sectors, including chemicals, engineering, and refineries, saw slower earnings growth in FY24, with profitability rising by 38%, 27%, and 25%, respectively. However, the technology sector faced challenges, reporting a loss of Rs5.7 billion, largely due to losses from Pakistan Telecommunication
Company (PTC). Conversely, the pharmaceutical sector experienced a 71% increase in profitability, achieving Rs 10 billion, up from Rs6 billion in FY23, thanks to improved margins after the deregulation of non-essential products and lower finance costs.
Topline Research analyzed 86 companies out of the KSE-100, representing 95% of the market capitalization.
Dividends Distributed by Top Companies
The top 86 companies declared a combined cash dividend of Rs666 billion in FY24, reflecting a 30% increase from Rs512 billion in FY23. This results in a 40% dividend payout for FY24, compared to 39% in the previous fiscal year.
The payout ratio for the oil and gas exploration (E&P) sector climbed from 21% in FY23 to 27% in FY24, as companies benefited from enhanced cash flows due to elevated gas prices. Similarly, the banking sector’s payout ratio increased from 42% in FY23 to 47% in FY24, buoyed by record profits in 2024.
The banking sector led the way in dividend distribution, contributing Rs 278 billion, followed by the oil and gas exploration sector at Rs 118 billion, and the fertilizer sector at Rs 90 billion.
Also Read: Multinational Food Companies Report High Q1 2024 Sales
In summary, the fiscal year ending June 30, 2024, has been a watershed moment for Pakistan’s corporate sector, as the record profits in 2024 demonstrate a remarkable ability to thrive amidst economic adversity.
