Despite a notable drop in sales, Al-Ghazi Tractors Limited paid ‘higher cash dividends than earnings’ to shareholders as it closed financial year 2015 with a net profit of Rs1.6 billion, according to a notification sent to the Pakistan Stock Exchange on Friday.
The company reported net earnings of Rs1.59 billion or Rs27.47 per share for the financial year ending December 31, 2015, up 1.1% compared to Rs1.57 billion or Rs27.17 per share it earned in the previous year.
“This result was in line with our expectations,” Topline Securities said in its report, adding the company paid out significantly higher cash dividend than earnings because of its large cash reserves. Al-Ghazi Tractors announced a final cash dividend of Rs25 per share, taking the full-year dividend to Rs85 per share compared to Rs25 per share of 2014.
The stock, which traded at Rs392.37 the previous day, increased by Rs9.63 or 2.45% to close at Rs402 at close on Friday with 18,100 shares changing hands.
The company’s earnings for 2015 remained almost flat because of lower volumes, which decline 58% year-on-year, BMA Capital said of the result.
The company’s revenues for 2015 clocked in at Rs9.7 billion, up 9.8% compared to Rs8.8 it grossed in 2014. However, the revenues in October-December quarter of 2015 were down 58% when compared to the same quarter of 2014.
Sindh and Punjab have delayed the execution of their subsidies for tractor purchases, Topline Securities said, explaining the cause of decline in the company’s fourth quarter revenues.
The governments had announced subsidy schemes to provide 25,000 units and 29,000 tractors at subsidised rates in their budgets of fiscal year 2016. However, the schemes have been delayed substantially, thus, momentum of sales stalled as farmers defer their normal buying in anticipation of subsidised tractors, the report said.
It further said significant decline in the commodity prices, particularly agricultural commodities, has substantially reduced purchasing power of farmers.
“On quarter-on-quarter basis, the company witnessed a similar declining trend,” the report said.
Published in The Express Tribune, February 13th, 2016.