Energy, power sector FY11 recurring profits up 29%

KARACHI: Higher global crude oil prices, slight improved hydrocarbon production and restricted exploration expense reflected positively on energy and power sector’s profitability in FY11.

During the period under-review, sector’s profitability increased by 18 percent to Rs 105.8 billion as compared to Rs 90.0 billion last year.

However, earning growth could have been even higher at 29 percent if analyst excluded one-time retro respective adjustment of Kunnar crude oil prices.

For the period under-review, sector’s top-line rose by a noteworthy 17 percent to Rs 258.5 billion on account of favourable price as well as volumetric variance. International crude oil prices (Arab Light) rose by a 35 percent to average $93 per barrel in FY11 while sector’s oil and gas production rose by 2.8 percent and 2.2 percent respectively.

However, the growth was partially diluted by one-time retro-respective adjustment of Rs 15.2 billion of Kunnar field crude oil prices. Adjusting for the impact, sector’s topline grew by 24 percent.

In addition, 9.3 percent decline in exploration cost to Rs 12.2 billion and 31 percent increase in other income to Rs 9.7 billion also led their hand to the phenomenal growth in the profitability. Increase in other income mainly contributed by POL and PPL, which are least affected by circular debt as they earned higher return on their bank placements.

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