Pakistan’s corporate sector closed 2024 with a marginal decline in profitability, but beneath the surface, a tale of stark contrasts emerges. Data from Topline Securities reveals that while the overall profits of KSE-100 index companies fell by 1% year-on-year (YoY) to Rs1.62 trillion, several industries experienced significant swings—some surging to record highs, others tumbling.
The energy sector weighed heavily on overall profitability, but banks, fertilisers, cement, and automobiles provided a strong counterbalance. Meanwhile, dividend payouts surged 27%, as companies sought to reward investors amid uncertain economic conditions. Total payouts rose to a record Rs750 billion in 2024, up from Rs592 billion in the prior year.
Here is a breakdown of what happened in each sector, and why.
Oil & Gas: A drag on market profitability
The upstream oil and gas exploration and production (E&P) sector bore the brunt of declining oil prices and lower production, with earnings slumping 24% YoY to Rs364 billion. This marked a steep reversal for the sector, which has historically been a strong contributor to market profitability. Indeed, the decline in this upstream energy sector was so significant that, excluding this sector, the market’s profitability is up 8% for the calendar year 2024.
Oddly enough, dividends rose by 30% for the sector, from Rs93 billion to Rs121 billion. This is driven in large part by the fact that the largest companies in this sector – the Oil & Gas Development Company (OGDC) and Pakistan Petroleum Ltd (PPL) – are both state-owned entities, and the government can lean on them to pay out higher dividends in years of fiscal distress, even at the expense of capital expenditures in their future growth. The content in this publication is expensive to produce. But unlike other journalistic outfits, business publications have to cover the very organizations that directly give them advertisements. Hence, this large source of revenue, which is the lifeblood of other media houses, is severely compromised on account of Profit’s no-compromise policy when it comes to our reporting. No wonder, Profit has lost multiple ad deals, worth tens of millions of rupees, due to stories that held big businesses to account. Hence, for our work to continue unfettered, it must be supported by discerning readers who know the value of quality business journalism, not just for the economy but for the society as a whole.To read the full article, subscribe and support independent business journalism in Pakistan
