corporate result: Mughal Iron posts quarterly profit of Rs315m

Plans to expand re-rolling capacity by 396,000 tons at a cost of Rs2.27b

Our Correspondent February 27, 2018
The Mughal Iron and Steel IPO was oversubscribed by nearly 3.3 times what the company expected to raise in the institutional phase of the offering. PHOTO: AFP

KARACHI: Mughal Iron & Steel has posted a net profit of Rs315 million in the Oct-Dec quarter of financial year 2017-18, up 45% from Rs217 million in the corresponding period of last year, according to a company notice sent to the Pakistan Stock Exchange (PSX).

The result was above market expectations. Earnings per share (EPS) increased to Rs1.25 compared with Rs0.92 in the corresponding period of previous year.

This takes the Jul-Dec net profit to Rs620 million for FY18 compared with Rs474 million for FY17.

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According to a research report of First Capital Equities Limited, the company also announced phase-II of its expansion plan where the company would make a capital expenditure of Rs2.27 billion to increase the re-rolling capacity by 396,000 tons. The company intends to finance the phase-II using long-term debt.

Moreover, the company postponed the commencement of phase-I of the expansion plan to the second quarter of FY19 while it also expects the phase-II to come on line at the same time.

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Revenues for the second quarter of FY18 increased 16.4% year-on-year due to higher retail prices and volumes. They remained relatively flat on quarter-on-quarter basis (up 7.2%) which was on the back of higher retail prices.

Expectedly, gross margins increased in the first half of FY18 to 12.8% compared with 10% in the same period of last year as commissioning of gas power plants combined with internal production of billets more than offset the impact of higher scrap prices.

Published in The Express Tribune, February 27th, 2018.

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