KTML’s profitability drops by 52% in FY22

September 05, 2022 (MLN): Kohinoor Textile Mills (KTML) has witnessed a 52% decline in its consolidated net profits that clocked in at Rs5.33 billion (EPS: Rs12.93) for the fiscal year ended on June 30, 2022, compared to Rs11.05bn (EPS: 28.26) in the same period a year ago.

This decrease in earnings is due to an increase in energy prices, freight rates and a hike in the price of synthetic fibres.

During the period under review, the topline went up by 34% YoY to Rs88bn on an account of increase in selling prices and devaluation of PKR against USD. Despite a 28% YoY increase in the cost of sales, this surge in topline expanded the gross margins by 3ppt to 27% during FY22.

With regards to major expense heads, the company encountered a 6.6x YoY higher other expenses which stood at Rs6.3bn while the company witnessed a 34% YoY and 32% YoY rise in its administrative and distribution expenses, respectively, likely due to greater sales and transportation costs.

Meanwhile, the other income fell substantially by around 94% YoY to peg at Rs332mn. Notably, the finance cost of the company jumped by 28% YoY to Rs2.6bn due to higher borrowing rates, affecting the financial health of the company.

Further damage was done by the tax expense that ballooned by 90% YoY to Rs5.bn, restricting the bottom line.  

Accompanied by the result, the Board of Directors (BoD) of KTML approved investment up to Rs1,000mn as loans /advances to Maple Leaf Cement Factory Limited (MLCF), a subsidiary company of the company, to meet the working capital requirements of MLCF, subject to the approval of the shareholders of the Company.

The similar nature of the reciprocal facility of loans/advances of Rs500mn for working capital requirements of the company has already been recommended by the Board of MLCF, subject to the approval of the shareholders of MLCF.

Further, the BoD approved investments up to Rs1,000mn as loans /advances to Maple Leaf Capital Limited (MLCL), a subsidiary company of the company, to meet the working capital requirements of MLCL, subject to the approval of the shareholders of the Company under Section 199 of the Companies Act, 2017.

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