Amreli Steels reports 48% surge in profit for FY18

Increase comes in the wake of 12% rise in gross profit as well as tax credit

Our Correspondent September 13, 2018
Amreeli Steels experienced 48% surge in profit. PHOTO:FILE

KARACHI: Amreli Steels Limited (ASTL) registered an after-tax profit of Rs1.6 billion for fiscal year 2017-18, a significant increase of 48% on a year-on-year basis.

Earnings per share (EPS) stood at Rs5.34 and the company also declared a cash dividend of Rs2.2 per share. Revenue for the year rose 17% due to rise in the average selling price and higher output.

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“Earnings showed a jump of 48% because of 12% rise in gross profit and a significant reduction in taxes on account of tax credit received in relation to the new Dhabeji production line,” said Taurus Securities’ research analyst Moazzam Akhtar.

“The increase in profits came despite a staggering 89% increase in finance cost, which was mainly due to increase in borrowing for funding expansion, and 19% higher distribution and administration expenses,” Akhtar added.

According to a report of First Capital Equities, higher costs have been incurred because the company has been trying to tap the northern steel market. BMA Capital’s Faizul Sultan said the steel company recorded a tax income of Rs395 million in the fourth quarter, stemming from the entitlement of 10% tax credit under Section 65(b) of the Income Tax Ordinance on plant and machinery.

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“In terms of surprises, gross margins for the fourth quarter came in at 13.2%. We think the company made provisions for the past dues of gas infrastructure development cess (GIDC) in the fourth quarter, which pulled the margins down,” he said.

The company’s new plant at Dhabeji commenced operations at the end of financial year 2017-18 with production capacity of 400,000 tons.

Published in The Express Tribune, September 13th, 2018.

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