Nishat Mills’ profit plunges 40pc to Rs1.89bn

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LAHORE: The Board of Directors of Nishat Mills Limited (NML) met on Friday to review the company’s performance and announce its financial results for the half-year ended December 31, 2019.

According to the financial results, the textile conglomerate reported a profit after tax of Rs1.891 billion for the six months ending December 31, 2019, as compared to Rs3.164 billion for the corresponding period last year, showing a decrease of 40pc.

The BoD also recommended further equity investment up to Rs2.144 billion in the shares of MCB Bank Limited, an associated company, subject to the approval of the shareholders under section 199 of the Companies Act, 2017.

Its earnings per share (EPS) were recorded at Rs5.38, which is a decrease of 59.7pc from Rs9 last year.

The textile giant’s profit before tax clocked in at Rs2.418 billion, as compared to Rs3.640 billion during the same period last year.

QUARTERLY COMPARISONS

In its 2QFY20 result, NML reported a net profit of Rs968 million (EPS: Rs2.75) as compared to Rs2,100 million (EPS: Rs5.97) in 2QFY19, down by 54pcYoY.

According to Umer Farooq, research analyst at AKD Securities, the earnings came in 16pc lower than their expectations.

He mentioned in his report that the deviation was mainly on two accounts; firstly, lower than expected revenue (8pc below expectations) and secondly, weaker than expected margin at gross level (actual 11.07pc vs expected 12.46pc), signifying low materialisation of translation gains in PKR terms.

Umer stated that topline grew by a nominal 6pc YoY, signifying weak translation of currency gains in final product prices.

He added that margin at gross level contracted 72bps YoY, suggesting elevated cost pressures.

Umer opined that finance cost declined 27pc YoY on account of lower borrowing and higher subsidised financing mix.

“Selling and Administrative (S&A) costs grew 6pcYoY — in line with revenue growth,” he mentioned.

The AKD report stated that other income declined 66pc YoY on lower payouts from portfolio companies and one-off exchange gain recorded in same period last year (SPLY) created a high base.

Umer wrote that however, the same was 13pc ahead of our expectation possibly due to higher income on loan to subsidiary.

“Sequentially, earnings increased by a meager 5pcQoQ on seasonally higher other income (up 37pcYoY), while core textile earnings declined 34pcYoY due to margin attrition (247bpsQoQ) at gross level,” he stated.

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