Corporate results: Millat Tractors’ profit up 61% to Rs2.4 billion

Earnings driven by higher sales after reduction in sales tax

KARACHI:

Millat Tractors Limited boosted its net earnings by more than 60% on the back of higher sales in the year ended June 30, 2015, according to a notice sent to the Karachi Stock Exchange on Friday.

A subsidiary of Millat Group of Companies, the company posted an after-tax profit of Rs2.4 billion or Rs53.8 per share for fiscal year 2014-15, up 61% compared to Rs1.5 billion or Rs33.5 per share in FY14.

The results were accompanied with a final cash dividend of Rs27.5 per share, which was in addition to an interim dividend of Rs25 per share already paid to the shareholders.

However, the stock, which traded at Rs655.84 the previous day, fell Rs13.84 or 2% to Rs642 per share at the close of market on Friday with 27,850 shares changing hands.

“The results were in line with market expectations,” Taurus Securities Head of Research Zeeshan Afzal told The Express Tribune, adding the fall in stock price was not big when seen in the context of market performance, which was down 1.5%.

However, Afzal said there was talk that Millat Tractors might not pay much dividend because it had planned capital expenditure for producing generators. But that didn’t happen, he said.

Taurus Securities attributed the increase in net earnings for FY15 to higher tractor sales, up 36% to 28,711 units, as prices came down after general sales tax was reduced from 16% to 10% in the year under review.

The company’s revenues for the year were Rs23 billion, an increase of 38% compared to Rs17 billion for FY14, while gross margins rose 1.3 percentage points to 19.2% and other income increased 35% to Rs404 million. Falling steel prices also helped in improving the margins.

However, the quarterly result, according to Afzal, was slightly below estimates due to fall in other income.

Profit for the quarter ended June 30, 2015 dropped 2% to Rs597 million or Rs13.5 per share compared to Rs610 million or Rs13.8 per share for the previous quarter because of higher tax expense - that is 43% effective tax rate for the quarter - driven up by the super tax.

Published in The Express Tribune, September 5^th, 2015.

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