Aisha Steel: Higher finance costs deteriorate bottom line

April 28, 2020 (MLN): Aisha Steel Mills Limited (ASL) has unveiled its 9MFY20 results, wherein the company has posted 2. 89 times increase in net losses to Rs 438 million when compared to net losses of Rs 151 million in the same period of last year.

This has translated into a loss per share which clocked in at Rs 0.67 against loss per share of Rs 0.28 in the aforementioned period.

The company underwent losses in 9MFY20 due to higher finance costs.

As per the financial statement issued by the company to PSX, ASL’s topline soared by 81.5% YoY on an account of higher volumetric sales along with higher CRC prices than a proportionate increase in the cost of sales owing to increased energy cost and PKR devaluation, caused gross profits to increase marginally by 2.27% YoY to Rs 1.99 billion. Therefore, the gross margin increased slightly from 6.5% to 8%.

The company witnessed an increase in its major expense heads as administrative expenses went up by 25.7% YoY from Rs 193 million to Rs 243 million. Moreover, selling and distribution costs jumped by around 86% YoY during 9MFY20.

The major culprit behind the red bottom line was colossal finance cost which increased by 96% YoY to Rs 2.64 billion on account of rising short-term loans to meet working capital requirements. However, a tax reversal of Rs 444 million provided a cushion to its bottom line.

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