Higher finance cost takes a toll on Mughal Iron's earnings during FY20

MG News | September 17, 2020 at 02:53 PM GMT+05:00

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September 17, 2020 (MLN): Mughal Iron & Steel Industries’ earnings for the year ended June 30, 2020 stood at Rs. 592.8 million (EPS: 2.36), i.e. around 57% lower than the profits earned last year.

The decline in earnings was perpetuated by lower revenues during the period, owing to impact the outbreak of COVID-19 and lockdown restrictions had on the business operations and demand for the company’s products.

Further damage was caused by an increase in the finance cost by almost 93%, which resulted from higher working capital requirement and the capital expenditure incurred during the year.

However, there were some positive attributes to the financial outcome for the years, such as the 96% growth in other income, as well as presence of tax credit.

The Board of Directors of the company also approved measurement of certain items of operating fixed assets comprising of Land, Building on Freehold Land, Plant & Machinery and Power Plant on “Revaluation Model” resulting in revaluation surplus of Rs. 2.842 billion approximately.

Financial Results for year ended June 30, 2020 (Rupees)
	Jun-20	Jun-19	% Change
Sales	27,304,991,323	30,828,088,786	-11.4%
Cost of sales	(24,687,542,736)	(27,639,095,197)	-10.7%
Gross Profit	2,617,448,587	3,188,993,589	-17.9%
Sales and marketing expenses	(143,886,023)	(201,591,683)	-28.6%
Administrative expenses	(407,031,747)	(366,851,773)	11.0%
Other charges	(53,449,687)	(123,486,662)	-56.7%
Impairment loss on trade debts	(3,356,549)	(3,310,221)	1.4%
Other income	58,788,294	29,998,500	96.0%
Finance cost	(1,514,785,880)	(786,328,489)	92.6%
Profit before taxation	553,726,995	1,737,423,261	-68.1%
Taxation	39,145,070	(364,492,082)
Profit after taxation	592,872,065	1,372,931,179	-56.8%
Earnings per share	2.36	5.46	-56.8%

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