Earnings inch up only 2.4% in second quarter due to delay in tax rebates, higher finance cost.
PHOTO: FILE
The company posted consolidated earnings of Rs2.65 billion in the three-month period, up 2.4% compared with Rs2.59 billion in the same period of last year, according to a company notice sent to the Pakistan Stock Exchange (PSX). Although it posted a 14% increase in revenue, the profit remained almost flat due to high finance cost. The finance cost rose 63% to Rs684 million.
However, the same cost for its textile business nearly doubled to Rs444 million in the second quarter of financial year 2019 amidst high borrowing, said Topline Securities’ analyst Shankar Talreja. He said the company made borrowing for the textile business due to delay in release of rebates.
Nishat Mills’ profit rises 17% to Rs8.84b
Earlier, Pakistan Hosiery Manufacturers and Exporters Association (PHMA) Central Chairman Muhammad Jawed Bilwani said the government had to clear dues worth Rs45 billion under the Duty Drawback of Taxes (DDT) scheme and Drawback of Local Taxes and Levies (DLTL) scheme; another Rs40 billion in sales tax refunds; around Rs6 billion in customs rebate and nearly Rs2 billion in withholding tax refunds and others for the period January 2017 to August 2018.
The textile sector expects a 10% growth in exports if the government releases the outstanding tax and duty refunds on time. Like the entire textile sector, which is facing liquidity crunch, Nishat Mills had to borrow from banks, which was reflected in its finance cost. Since January 2018, the key policy rate of the State Bank has gone up 4.5 percentage points to 10.25%.
Earnings per share (EPS) of the company remained flat at Rs6.27 in the second quarter of financial year 2018-19 compared to the same period of previous year.
However, according to JS Research analyst Ahmed Lakhani, earnings were higher than expectations.
Moreover, in the half year ended December 31, 2018, the company posted a profit of Rs4.74 billion, up 1.6% against Rs4.67 billion in the same period of last year. Its EPS stood at Rs10.84 in Jul-Dec 2018 against 10.97 in the same period of previous year.
The board of directors decided to make further equity investment of up to Rs200 million in Nishat Hotels and Properties Limited, an associated company.
Published in The Express Tribune, February 27th, 2019.
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