Listed companies’ sales fell in the second quarter – Business

KARACHI: In yet another manifestation of the economic slowdown, sales of a majority of listed companies fell for the second consecutive quarter in October-December.

Talking to Dawn On Saturday, Arif Habib Ltd head of research Tahir Abbas said total revenue for listed companies fell 0.1 percent to Rs2.59 trillion on a sequential basis in October-December – an unusual development given that the top lines of large companies have tend to expand under high inflation.

“The fall in absolute sales figures is primarily due to oil, which shrank in both value and volume. Apart from that, quarterly revenue rose 3.3 per cent. compared to the previous three-month period.”

Abbas pointed out that volume sales have declined in most sectors due to the economic slowdown combined with high inflation.

The total turnover for listed companies fell by 0.1 per cent. to 2.59 tr

“Cement, auto, steel and textile are some of the sectors that have seen a significant decline in volumetric sales,” he said, adding that this decline has been overshadowed by rising turnover figures amid high inflation.

Another reason for the declining volumetric sales is the import restrictions imposed by the State Bank of Pakistan (SBP) to minimize dollar outflow.

In particular, Mr Abbas referred to the car sector, which has experienced price increases of up to 75 per cent. over the course of a year or so, while its volumetric sales have fallen to a multi-year low.

“The situation reflects two things: One, the general economic slowdown has robbed people of their purchasing power. And second, official restrictions on the import of raw materials have forced companies to scale back their activities,” he said.

There has been “no visible wage growth” in Pakistan, even though inflation is at a multi-decade high. In fact, unemployment appears to be rising given the production shutdown announcements that listed companies have been issuing quite frequently recently, he added.

The brokerage house’s analysis of quarterly sales data is based on the latest financial results from 69 of the top 100 listed companies. It excluded commercial and investment banks, insurance companies, leasing companies, mutual funds and mutual funds from the analysis, while 11 companies have yet to publish their results.

However, in terms of profitability, companies that are part of the KSE-100 index had a quarterly increase of 5.1 percent. in October-December. The increase was led by banks, whose earnings rose by 20.8 per cent. compared to the previous quarter due to lower tax. The cement companies’ profits increased by 59.8 per cent. quarter-on-quarter, due in part to their use of cheaper coal.

Published in Dawn, 12 March 2023

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