Corporate result: Amreli Steels announces Rs1.28b profit

Non-interest income clocked up at Rs2.2 billion, 22.5% higher

KARACHI: Amreli Steels Limited (ASTL) announced a profit after tax of Rs1.28 billion in fiscal year 2016, up 26% compared with Rs1.01 billion in the same period of previous year, according to a company notice sent to the Pakistan Stock Exchange (PSX).

Along with the result the company declared a stellar dividend of Rs2.0 per share (46% pay-out ratio).

Earnings per share (EPS) jumped to Rs4.81 compared to Rs4.54 in the period under review.

The company’s share price jumped 2.31% when it closed at Rs65.44 at the end of trading. The KSE-100 Index closed at 40,340, up 203 points or 0.51% on Friday.

During fiscal year 2016, sales revenue declined 14% year-on-year to Rs12.4 billion as volumes declined due to excessive dumping of cheap Chinese re-bars (fiscal year 2016 (FY16) Iron & Steel imports +36.47% year-on-year).

However, margins expanded 5.1% as ASTL maintained pricing amid declining input costs (scrap -35% year on year).

Resultantly, gross profits grew 11% to Rs2.8 billion, while the bottom line was supported by 50% reduction in finance cost amid aggressive deleveraging.

However, higher effective tax rate (27% versus 20% the same period of last year), likely due to super tax, restricted full potential of earnings growth.

Published in The Express Tribune, September 10^th, 2016.

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