Challenging time for Millat Tractors continues

February 19, 2020 (MLN): The Six months of the current fiscal year (FY20) remained challenging for Millat Tractors Limited (MTL) as the company observed 59% drop in its net profits after tax to Rs 748 million compared to Rs 1.8 billion reported in the corresponding period last year.

This translated in to company's Earning per share (EPS) which shrank signinficantly from Rs36.54 per share to Rs 15 per share.

During the period, overall revenues of the company declined from Rs 15.4 billion to Rs 10.4 billion on account of decline in sales volume.

As the business of the company is closely linked with the agriculture sector, therefore, any adverse effect on this sector impacts company’s performance. Slowdown in economic activity coupled with higher interest rate and shift in weather during the period kept agriculture output subdued.

Furthermore, despite company realized 29% YoY decline in cost of sales, the margins of the company reported a decline of 3 ppts from 23% to 19%.

On the cost side, the company witnessed a decline in its major expense heads, as its admin cost weakened by 6%, distribution expenses fall by 6.6% but a notable decline in its other operating expenses by 74% and tax expenses by 58% provided a cushion to company’s profitability.

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