Avanceon Group records a 17% decline in earnings despite growth in revenue

September 15, 2020 (MLN): Avanceon Group announced its financial results for the half-year ended June 30, 2020, on Tuesday, which showed profits of Rs. 427 million (EPS: 2.02), i.e. 17% lower as compared to the same period of last year.

The company performed fairly well in terms of revenue, which showed a growth of 19% during the period under review. On the contrary, the cost of sales surged by 17%. The impact of these two changes led to a 22.2% growth in gross profit.

According to Arif Habib Limited, gross margins remained almost constant at 28%. During 2QCY20, gross profit clocked in at Rs. 220 million, decreasing by 35% as compared to the previous quarter and margins receding to 21% as compared to 35% in 1QCY20.

The deterioration in margins was primarily on account of low revenue recognition during 2Q from certain contracts in Qatar, Dubai, and Pakistan, owing to the fallout of COVID-19 on the business environment. The management expects to cover most of the suspended revenue in 3Q, the report added.

While there was an increase of 21% in admin & selling expenses, the company got some respite from a 9% decline in non-core expenses.

There was a fall of 35.5% in other income due to lower exchange gains earned by the company during the period.

The company also booked a tax reversal of Rs. 7.43 million during the six months due to the recognition of deferred tax assets.

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