Nishat Mills profits rise marginally to Rs1.063b

Nose-diving other income diluted profitability from core operations.

KARACHI: Nishat Mills – the flagship company of the Nishat Group – posted a profit of 1.063 billion for the first quarter of the fiscal year 2012-13 against Rs1.031 billion in the corresponding quarter of the preceding year, up 3% year-on-year. The company recorded a profit of Rs1.002 billion in the last quarter of fiscal year 2012.

The marginal growth in profit was attributable to improved core operations; revenue growth, better gross profit margins. However, declining other income restricted textile manufacturer’s profitability, says a BMA Capital research note.

Revenues grew 18.4% to Rs12.96 billion in the period under review as the textile manufacturer was able to fetch better realised prices in spinning and value added segment.

According to indexmundi.com, cotton prices during the quarter averaged Rs75.59 per pound, which improved gross profit margins to 15.7% resulting in a gross profit of Rs2.04 billion.

Nishat Mills was also able to cut down operating expenses by 30% due to contained fuel and power costs. The company established a six megawatts alternative energy project to power its production units.

Finance costs tuned down to Rs429 million, down 5% year-on-year, mainly due to lesser interest payable on its borrowings because of monetary easing by State Bank of Pakistan.

Other income dived 64%, denting profitability, to Rs470 million owing to lower dividend income from investments in associated companies, such as MCB Bank and Nishat Power.

Published in The Express Tribune, October 26^th, 2012.