Corporate results: Nishat Mills posts profit of Rs5.51 billion

Announces final cash dividend of Rs4 per share.

KARACHI:

Nishat Mills has posted an unconsolidated net profit of Rs5.51 billion for the year ended June 30, 2014, down 6% year-on-year (YoY) compared to Rs5.85 billion in the previous year.

Earnings per share (EPS) of company also reduced to Rs15.68 compared to an EPS of Rs16.63. The company further announced a final cash dividend of Rs4 per share, implying a dividend payout ratio of 26%.

An AKD Research report on Tuesday said the result was in line with its projections. Similarly, BMA Capital report also said that the result was in line with its expectations.



The company’s fourth-quarter earnings of fiscal year 2014 clocked in at Rs889 million or an EPS Rs2.53, posting a sequential recovery of 15% quarter-on-quarter largely due to significantly higher dividend income from associates.

That said, fourth quarter’s net profit was 49% lower than in the same quarter last year due to the sharp appreciation of the rupee against the dollar, which dragged the realised value of exports lower.

The gross margins for fiscal year 2014 clocked in at 14% as opposed to the gross margins of 17% in fiscal year 2013. This decline was a result of contracting margins in the second half of fiscal year 2014 where gross margins contracted to 10% as opposed to gross margins of 19% in the first half of fiscal year 2014.

Other key announcements accompanying the result concerned the investments in the other companies of the group.

In this regard, the board of directors (BoD) approved an investment of up to Rs4.87 billion across three years in the 660MW coal power project being set up under the name of Nishat Energy Limited (NEL).

Assuming project cost of around Rs100 billion, and a Debt to Equity structure of 80:20, implies a direct equity stake of 24.38% in NEL.

Assuming the remaining equity portion is split evenly among group consortium partners NPL, Nishat Mills is expected to end up with an effective stake of 51% in NEL (taking into account only direct investments in NPL and other associates).

The company has also sought and obtained approval from the Punjab Power Development Board (PPDB) for a change in the site of the coal power plant to Ameer Pur, Rahim Yar Khan.

The company is now in the process of getting the necessary changes in the deadline for the feasibility study of the project.

Published in The Express Tribune, September 24^th, 2014.

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