Aisha steel witnesses 83% YoY decline in net profits

February 28, 2022 (MLN): Aisha Steel Mills Limited (ASL) has witnessed a huge 83% YoY decline in net profits for 1HFY22, mainly due to lower offtakes on the back of weak sentiment in the domestic market owing to volatility in the international HRC and CRC prices.

The company’s net profits declined to Rs451.9 million (EPS: Rs0.53) during 1HFY22, against Rs2.5 billion (EPS: Rs3.21) in the corresponding period last year.

The net sales of the company clocked in at 31.6bn, up by 24% YoY due to the rise in CRC prices. On the other hand, the cost of production was higher during the review period as it jumped by 38% YoY, allowing gross margin to decline notably to 8% from 18%, the effect of which also trickled down to the bottom-line.

The distribution and administrative expenses both upsurged by 425% and 33% YoY respectively, whereas the other expenses slithered by 83% YoY. This along with the 132% YoY increase of finance expense owing to exchange loss and increase in the policy rate in the 1QFY22, greatly hampered the profitability of the company.

The company recorded an effective tax rate of 24% against 27% reported in the same period last year.

The net margin was recorded at 1% compared to 10% in 1HFY21.

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