Higher finance cost turns Aisha Steel’s profits into losses

September 24, 2020 (MLN): Aisha Steel Mills (ASL) has announced its financial results for FY20, wherein the company has reported a net loss of Rs 616 million (LPS: Rs 0.89) against the net profit of Rs 253 million (EPS: Rs 0.26) reported in FY19.

According to the financial results issued to PSX, the company incurred losses during the FY20 on an account of weak demand and higher finance cost.

In FY20, the topline of the company witnessed an increase of 47.2% YoY due to higher offtakes stemming from new online expansion, as per the research of Fortune Securities, resulting in an increase in gross profits by 41% to Rs 2.36 billion.

On the cost side, the major highlight is the upsurge in expense heads as administrative expenses went up by 28% YoY from Rs 249 million to Rs 319 million. Moreover, selling and distribution costs rose by 67% to Rs 41 million.

However, it was the rise in finance cost which ballooned by 81.5% YoY which turned the company’s profits into losses. The company’s financing expenses increased on the back of an increase in long term borrowings due to expansion, research by Darson securities mentioned.

 Profit and Loss Account for the year ended June 30, 2020 (Rupees '000)

 

Jun-20

Jun-19

% Change

Revenue from contracts with customers

 29,776,828

 20,230,797

47.2%

Cost of sales

 (27,410,644)

 (18,552,531)

47.7%

Gross Profit

 2,366,184

 1,678,266

41.0%

Selling and distribution cost

 (41,889)

 (25,070)

67.1%

Administrative expenses

 (319,589)

 (249,346)

28.2%

Other income

 38,186

 49,027

-22.1%

Profit from operations

 2,042,892

 1,452,877

40.6%

Finance cost

 (3,386,116)

 (1,865,306)

81.5%

(Loss) before income tax

 (1,343,224)

 (412,429)

225.7%

Taxation

 726,651

 666,127

9.1%

(Loss)/ profit after taxation

 (616,573)

 253,698

Earnings/(loss) per share – Basic

 (0.89)

 0.26

 

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Posted on: 2020-09-24T10:19:00+05:00

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